{"data":{"id":"us-ky/krs-278.688","jurisdiction":"us-ky","citation":"KRS 278.688","heading":"Sale, assignment, or transfer of securitized property -- Application of","body":"income tax law to transaction -- Conditions for enforceability.\n(1) Any sale, assignment, or other transfer of securitized property shall be an absolute\ntransfer and true  sale of, and not a pledge of or secured transaction relating to the\nseller's right, title, and interest in, to, and under the securitized property if the\ndocuments governing the transaction expressly state that the transaction is a sale or\nother absolute transfer other than for federal and state income tax purposes.\n(2) For all purposes other than federal and state income tax purposes, the parties'\ncharacterization of a transaction as a sale of an interest in securitized property shall\nbe conclusive that the transaction is a true sale and that ownership has passed to the\nparty characterized as the purchaser, regardless of whether the purchaser has\npossession of any documents evidencing or pertaining to the interest. A sale or\nsimilar outright transfer of an  interest in securitized property may occur only when\nall the following actions have occurred:\n(a) The financing order creating the securitized property has become effective;\n(b) The documents evidencing the transfer of securitized property have been\nexecuted by the assignor and delivered to the assignee; and\n(c) Value is received for the securitized property.\nThe securitized property shall not be subject to any claims of the transferor or the\ntransferor's creditors, other than creditors holding a prior se curity interest in the\nsecuritized property perfected in accordance with this section.\n(3) The characterization of the sale, assignment, or other transfer as an absolute transfer\nand true sale and the corresponding characterization of the property interest  of the\npurchaser shall not be affected or impaired by the occurrence of any of the\nfollowing factors:\n(a) Commingling of securitized charges with other amounts;\n(b) The retention by the seller of:\n1. A partial or residual interest, including an equity int erest in the\nsecuritized property, whether direct or indirect, or whether subordinate\nor otherwise; or\n2. The right to recover costs associated with taxes, franchise fees, or\nlicense fees imposed on the collection of securitized charges;\n(c) Any recourse that the purchaser may have against the seller;\n(d) Any indemnification rights, obligations, or repurchase rights made or\nprovided by the seller;\n(e) The obligation of the seller to collect securitized surcharges on behalf of an\nassignee;\n(f) The transferor acting as the servicer of the securitized surcharges or the\nexistence of any contract that authorizes or requires the electric utility, to the\nextent that any interest in securitized property is sold or assigned, to contract\nwith the assignee or any financing party that it will:\n1. Continue to operate its system to provide service to its customers;\n2. Collect amounts in respect of the securitized surcharges for the benefit\nand account of the assignee or financing party; and\n3. Account for and remit required amounts to or for the account of the\nassignee or financing party;\n(g) The treatment of the sale, conveya nce, assignment, or other transfer for tax,\nfinancial reporting, or other purposes;\n(h) The granting or providing to bondholders a preferred right to the securitized\nproperty or credit enhancement by the electric utility or its affiliates with\nrespect to the securitized bonds; or\n(i) Any application of the formula -based true-up mechanism as provided in KRS\n278.670 to 278.696 and 65.114.\n(4) Any right that an electric utility has in the securitized property before its pledge,\nsale, or transfer, or any other right created under KRS 278.670 to 278.696 and\n65.114, created in the financing order and assignable under KRS 278.670 to\n278.696 and 65.114, or assignable pursuant to a financing order is property in the\nform of a contract right or a right to sue. Transfe r of an interest of securitized\nproperty to an assignee shall be enforceable only upon the later of:\n(a) The issuance of a financing order;\n(b) The assignor having rights in the securitized property or the power to transfer\nrights in the securitized property to an assignee;\n(c) The execution and delivery by the assignor of transfer documents in\nconnection with the issuance of securitized bonds; and\n(d) The receipt of value for the securitized property.\nAn enforceable transfer of an interest in securitized property to an assignee is\nperfected against all third parties, including subsequent judicial or other lien\ncreditors, when a notice of that transfer has been given by the filing of a financing\nstatement in accordance with KRS 278.692. After the transactio n and filing, the\ntransfer of the securitized property shall be absolute and shall be made free and\nclear of, and not subject to, competing claims of the creditors of the transferor,\nregardless of whether or not the competing claims are supported by any pr ior\nsecurity interest or lien, other than prior claims or security interests in the\nsecuritized property perfected in accordance with this section.","path":["KRS Chapter 278"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53809","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:53:31Z","sha256":"dae4a7df4740ea4b5b3c14dd9764e230c9b7dda6ad06a35a7d4c6a4cc5bfeecd","source_id":"us-ky","stale":false,"prev":"us-ky/krs-278.686","next":"us-ky/krs-278.690"},"notice":"GroundRules: Original legal text. Not legal advice."}