As reported last month by Bill Bosco, the Financial Accounting Standards Board planned to, and did in fact, meet on March 2 to finalize its decisions on the issue of recalculating a leveraged lease in the event of changes in timing of tax benefits. The Board affirmed its tentative conclusions that a change in timing of the realization of tax benefits should require a recalculation of the leveraged lease and a re-evaluation of the classification of the leveraged lease.

Features

The author continues her analysis of the elements of the senior-junior-borrower relationship that should be addressed with specificity in an intercreditor agreement.

So-called "hell or high water," "waiver of defense" and lessor favorable "submission to jurisdiction" clauses have long been cornerstones of equipment finance documentation. But, the unfolding debacle over the last year involving a company called NorVergence has cast an unfavorable light on these important provisions and, in doing so, entangled most of the top players in the leasing industry.

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Highlights of the latest insurance cases from around the country.

Features

New York has long been known as a state in which a direct liability insurer need not prove prejudice in order to prevail on a defense that the policyholder provided late notice of an occurrence or a claim. New York ranks among the minority of states following the "no prejudice" rule. According to Ostrager, Barry R. and Newman, Thomas R.: Handbook on Insurance Coverage Disputes, approximately 80% of the states require a liability insurer to prove prejudice to prevail on the late notice defense, while the remainder either follow a straight "no prejudice" rule or adopt different rules for different types of insurance policies.

Commercial General Liability ("CGL") policies typically provide two distinct benefits to policyholders: defense against potentially covered claims, and indemnity against covered claims. Because the duty to defend is broader than the duty to indemnify, it is as important, if not more important, than the duty to indemnify. <i>See, e.g., Buss v. Los Angeles Superior Court</i>, 65 Cal.Rptr.2d 366, 373, 939 P.2d 766, 773 (1997). Insurers often accept their defense obligations, however, subject to reservation of their rights to assert non-coverage. Now, with increasing frequency, insurers also are demanding reimbursement if it turns out that the liability claim was not covered.

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