In the Marketplace
Highlights of the latest equipment leasing news from around the country.
No Proration of Lessors' Payments in Bankruptcy
On March 15, 2007, the U.S. Court of Appeals for the Third Circuit (the 'Third Circuit') issued an important decision regarding the rights of equipment lessors who find themselves ensnarled in court proceedings as a result of a lessee's filing for bankruptcy protection. <i>In Re: Federal-Mogul Global Inc v. Computer Sales International</i> considered whether two lower courts properly modified an equipment lease under 11 U.S.C. '365(d)(5) of the Bankruptcy Code ' formerly codified at 11 U.S.C. '365(d)(10) ' by permitting proration of payment obligations as of the date of rejection of the leases. The Third Circuit reversed, holding that modification of the lease terms was improper.
Toll Road Leasing Programs: Ready to Roll?
States have recently, and with growing enthusiasm, embraced the use of public-private partnerships ('PPPs') as a highly effective method for addressing the significant capital needs associated with developing, expanding, and/or operating major roadway systems. Some of the largest roadway PPP deals to date have utilized leasing structures, and many states have enacted, or are in the process of enacting, legislation authorizing and encouraging leasing as a method to privatize toll roads. Leasing allows for an innovative teaming approach to the development and operation of various transportation-related assets, from design and construction through operation and toll collection. Leasing not only allows public sector officials to take advantage of private sector innovation and efficiencies, but it also provides a vehicle by which states can create large pools of money ' sometimes in the billions of dollars ' to address immediate and significant capital requirements without raising property or income taxes on their residents.
Associations Seek Role in Accounting Standard Reinterpretation
In a recent development in the ongoing reinterpretation of the accounting standard for commercial leases by the International Accounting Standards Board ('IASB') and the Financial Accounting Standards Board ('FASB'), The Equipment Leasing and Finance Association ('ELFA') has announced that six equipment finance representative associations from around the world have signed a joint communication seeking to have them play an instrumental and constructive role in the process. The joint communication by the ELFA, the UK Finance and Leasing Association, Leaseurope, the British Vehicle Rental and Leasing Association, the Australian Finance Conference, and the Canadian Finance & Leasing Association set forth 11 key principles that should be addressed as the IASB and FASB proceed with deliberations toward a single, efficient global leasing standard.
In the Marketplace
Highlights of the latest equipment leasing news from around the country.
Enforcement of State Security Breach Notification Laws
The first two installments of this series addressed security procedures and practices, document destruction, and security breach notification. The series concludes with a discussion of the varying enforcement policies at the state level.
NorVergence Maelstrom Rolls On: Floating Forum Clause Invalidated As Unreasonable
A recent decision from the Ohio Supreme Court may have an impact on the marketability of commercial lease agreements. In <i>Preferred Capital, Inc. v. Power Engineering Group, Inc.</i>, 112 Ohio St. 3d 429, 860 N.E.2d 741 (2007), the court held that an open-ended forum selection clause, often referred to as a 'floating forum clause,' was not enforceable. The <i>Preferred Capital</i> court found that a floating forum clause in a lease agreement, which provided that any lawsuit arising from the lease would be venued in the state of the lessor's <i>or its assignee's</i> principal place of business, was unreasonable and contrary to public policy. While one might conclude that the subject forum clause is innocuous, the court took issue with the fact that the designated forum could be transferred to another jurisdiction if the lease agreement were assigned. In other words, if the lease were assigned to an assignee with a principal place of business that differed from that of the lessor, the appropriate forum would change. Another significant consideration for the court was the disparity of information between the parties. At the time the lease agreements were executed, the lessor was aware that the leases would be assigned to a company that was based in a foreign jurisdiction. The court's refusal to enforce the forum clause was based, in large part, on the lessor's failure to disclose that information at the time the parties entered into the lease.
The Subprime Lending Crisis: What Does It Mean to the Leasing Industry?
The news is full of stories about the substantial, long-term effects of the subprime mortgage crisis on the mortgage-lending industry. But little has been written about how it will affect other market segments like the leasing industry. There will certainly be spillover, although it won't be as dramatic. This article explores what the leasing industry should be looking for, and doing, in response to this crisis.
In the Marketplace
Highlights of the latest equipment leasing news from around the country.
