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The New Battle of Midway: Appeals Court Finds Middle Ground for Lessors to Recover All Post-Petition Lease Obligations
The leasing industry is going through wars again. In addition to bankrupt industrial companies and retailers, airlines are either in bankruptcy or teetering on the brink of a Chapter 11 filing. Such precarious times engender a host of issues for lessors, the paramount question of course being “do I get paid?” Key to that is what lessors are entitled to for the “post-petition” phase, the time between the date of the bankruptcy filing and the date the lease is either assumed or rejected by a bankruptcy trustee or a debtor in possession (“DIP”). Fractious court decisions have made it uncertain how and for how much lessors may recover for post-petition contractual lease obligations, but now a new appellate court decision may prove to be the turning point toward victory for the leasing industry.
Destined to be a new benchmark in lessors' rights to recover in bankruptcy cases, this new case is titled CIT Communications Finance Corporation v. Midway Airlines Corp. (In re Midway Airlines Corp.), 406 F.3d 229 (4th Cir. 2005). As is well known, Midway Airlines succumbed to insolvency in 2001, and at first attempted to reorganize pursuant to Chapter 11 of the Bankruptcy Code. Unfortunately, it was unsuccessful in that endeavor, and its case was converted to a Chapter 7 liquidation.
Enter the lessor, CIT Communications Finance, a subsidiary of the global finance giant CIT (for ease of reference simply “CIT” hereinafter). In early 1999, the airline and CIT entered into a lease agreement, whereby Midway leased telephone equipment. The lease was for 5 years and called for a monthly payment of a little less than $12,000. As is typical, the arrangement gave CIT the right to assess interest, late charges, and attorneys' fees in the event of nonpayment.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.