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In the Marketplace
The California Department of Corporations has issued a release designed to provide guidance in determining whether a sale and leaseback ('sale-leaseback') transaction may be a loan subject to regulation under the California Finance Lenders Law ('CFLL'). The release notes that a typical sale-leaseback transaction involves a borrower signing an agreement to sell property to a third party and then lease back that property from the third party for a charge. The borrower then agrees to pay a certain amount of money to use the property until the 'lease' expires. When the 'lease' expires, the borrower has the option of repurchasing the property. If the borrower fails to make the lease payments within a certain number of days of the due date, the lender may repossess the property, sell it, and retain the proceeds.
In response to concerns about 'unscrupulous operators seeking to evade the CFLL by disguising their transactions as sale-leaseback transactions,' the Department of Corporations has prepared a list of factors that it will use to determine whether a sale-leaseback transaction may be a loan:
- The borrower seeks money and not the use of goods or property;
- The borrower receives money, followed by a 'sale' of the borrower's property to the lender, with a provision for repayment in the form of rent or payments to the lender;
- The borrower is in possession of the goods or property before obtaining money from the lender;
- The borrower gives up title to goods or property as security in exchange for receiving money;
- There is no risk to the lender of losing capital, other than the insolvency of the borrower;
- The lender has the power to accelerate the principal payment of the 'loan' upon default;
- The transaction includes agreements with provisions of title reversions and 'repurchase' within specified periods.
According to the Department of Corporations, the presence of one or more of these factors may indicate the presence of a loan transaction, despite the fact that a sale-leaseback transaction is titled or referred to as a 'lease' or a 'sale-leaseback' in the forms and paperwork. The intent of the parties and the economic substance of the transaction will ultimately be determinative. See the release at www.corp.ca.gov/commiss/rel56fs.htm.
The Alta Group of Lake Tahoe, NV, has announced that two industry veterans, Alan N. Frankel and Joseph N. Boland, have joined the U.S. division of Alta as principals. Previously, Frankel was president of Lighthouse Capital Corporation, a consulting firm specializing in health care leasing, and prior to that he headed Copelco Leasing Corporation. Boland was chief credit officer of IBM Corporation, where he was responsible for optimizing credit risk positions for financing, services, and mainline sales organizations in more than 80 countries. Before his employment with IBM, he spent a decade with Swiss Bank Corporation (now UBS) as the senior executive in the U.S. corporate banking division.
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.
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.
Warehouse Liability: Know Before You Stow!
As consumers continue to shift purchasing and consumption habits in the aftermath of the pandemic, manufacturers are increasingly reliant on third-party logistics and warehousing to ensure their products timely reach the market.
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.