Issues Requiring Attention in Lien Waiver, Access Clause
April 23, 2004
The first part of this article described the contents of the lien waiver and access agreement provision required by asset-based lenders. The conclusion discusses the major issues to be covered in the provision.
Identify Percentage Rent Issues that May Impact the Assignment and Subleasing of Retail Space
April 23, 2004
Shopping center leases often contain percentage rent clauses that provide for the ability of the landlord to share in the sales of a tenant over a specific sales threshold while providing the tenant with a lower total rent when sales do not meet the sales threshold. A typical percentage rent provision obligates the tenant to pay a percentage (<i>ie,</i> the percentage rent rate) of the amount of gross sales generated by and from the tenant's business operated at the leased premises, that exceed the threshold amount, <i>ie,</i> a "sales" base or "breakpoint," as additional rent.
In the Spotlight: Addressing the Dilemma of Tenant Parking
April 23, 2004
Dedicated parking spaces appurtenant to office leases, especially covered spaces, are a prized commodity, particularly in suburban markets where virtually all of a tenant's employees drive to work. A tenant may be able to negotiate an arrangement where it receives more parking passes than the actual number of cars it is permitted to park at the premises at any given time under the theory that not all employees with a parking pass will actually show up for work on any given day. The problem presented by this approach is, of course, the one day when every driver with a parking pass shows up for work and there is no room for all of their cars.
Civil Litigation Implications of Corporate Employees' Criminal Acts
April 01, 2004
When corporate employees engage in criminal wrongdoing, the result is often civil litigation against their employer. The criminal conviction of such employees, whether by trial or plea, or their invocation of the privilege against self-incrimination, can have serious adverse consequences in related civil litigations against their employer, even if the employee (or former employee) is not a party. This article discusses the use of such evidence against corporations.
Real Property Law
April 01, 2004
The latest real property law rulings you need to know.
True Lease or Secured Financing: Recovering Meaningful Residual Value
March 31, 2004
Equipment lessors bargain for a very different set of legal rights than secured creditors. These bargained-for rights are often subject to attack, particularly in the Chapter 11 context where it is common for interested parties to challenge the characterization of a Chapter 11 debtor's obligations under an agreement styled as a lease. <i>See In re APB Online, Inc.</i>, 259 B.R. 812, 815 (Bankr. S.D.N.Y. 2001). As the recent decision by the Third Circuit in <i>Duke Energy Royal, LLC v. Pillowtex Corp. (In re Pillowtex, Inc.)</i>, 349 F.3d 711 (3d Cir. 2003) illustrates, when faced with the question of whether a transaction constitutes a "true" lease or a secured financing, Bankruptcy Courts will look through the cosmetics of the deal to its substance. To avoid the re-characterization of an equipment lease by a Bankruptcy Court, an equipment lessor must structure its transactions to retain an economically meaningful "residual value" in the leased property.
