In the Marketplace
Highlights of the latest equipment leasing news from around the country.
Bankruptcy Court Decides When Trade Vendor Priority Claims Get Paid
The U.S. Bankruptcy Court for the Eastern District of Pennsylvania recently issued one of the first decisions in the Third U.S. Circuit Court of Appeals to interpret '503(b)(9), an important new Bankruptcy Code provision passed under the Bankruptcy Abuse Prevention and Consumer Protection Act: <i>In re Bookbinders' Restaurant Inc.</i> '503(b)(9) is certain to impact the relationship between a debtor seeking to reorganize and the trade vendors that deal with it.
Information Security Obligations
This article outlines the requirements for providing notification of a security breach under state security breach notification laws by any company and the factors that a public company needs to take into account regarding whether to disclose a security breach under federal securities law.
Illegal Use of Equipment
A Florida intermediate-level appellate court has held that a lessee is not relieved of its payment obligations when it discovers that it cannot lawfully utilize the leased equipment in the manner it intended. <i>De Lage Landen Financial Services, Inc. v Cricket's Termite Control, Inc.</i> While the writer is aware of similar results reached in other unreported Florida actions, this decision, the first reported decision in Florida, not only will provide assistance in dealing with similar scenarios but also exhibits the strength of standard lease clauses.
Vicarious Liability of Aircraft Owners and Lessors: A Chink in the Armor?
In 2005, the Superior Court of Rhode Island held that '44112 of Title 49 of the U.S. Code did not protect the owner and lessor of an aircraft from vicarious liability for negligence of a lessee of the aircraft. <i>Coleman v. Windham Aviation Inc.</i> In light of the decision in Windham (and others discussed below), owners, lessors, of aircraft must be aware of the possibility that a state court may very well impose vicarious liability.
Which Endorsements Are Right for Your Transaction?
A commercial real estate attorney representing a client that needs title insurance in a commercial real estate transaction must consider which endorsements would be best to provide the client with all the necessary title insurance protection. The first part of this series discussed which American Land Title Association endorsements are typical when representing a buyer, tenant, or lender in an acquisition or lease of commercial property. The conclusion addresses Lender Only Endorsements.
Revisiting Credit Support in Early Sale Transactions
In early sale transactions, particularly those involving lifestyle shopping centers, the seller may be faced with the prospect of closing the transaction prior to the date on which each of the tenants' opening co-tenancy conditions have been satisfied. As a result, the project is not generating its maximum level of income, thereby resulting in a lower income stream for the purchaser at closing. To avoid a reduction in the purchase price as a result of such opening co-tenancy rental relief, the seller can make post-closing payments to close this income gap.
In the Spotlight
The broker provision of a lease should acknowledge the broker or brokers entitled to compensation and provide representations that the parties have not worked with any other broker in connection with the lease. Typically, the parties also agree to indemnify each other for violating these representations.
A Tenant's Perspective on Co-Tenancy
In order to protect against a shopping center becoming less populated with retail department stores or so-called 'anchor' tenants, tenants will request, and frequently obtain, co-tenancy provisions in their lease documents. While theco-tenancy provisions will vary from tenant to tenant, most co-tenancy provisions will at least protect the tenant from 'anchor' stores ceasing to operate (<i>i.e.</i>, 'going dark') and from a certain percentage of 'in-line' tenants being closed for business. However, the co-tenancy provisions are often very vague as to how a landlord will be deemed to have cured a situation where an anchor store has closed for business.
