The USA PATRIOT Act Renewed: Reassessing Money Laundering Risk in Finance Transactions
October 30, 2006
The federal government is stepping up its aggressive enforcement of anti-money laundering/combating the financing of terrorism ('AML/CFT'). Enforcement actions have already spread beyond 'traditional' financial institutions, such as banks. Regulations that are expected to be promulgated soon will likely embolden these enforcement actions against leasing companies, equipment vendors, finance companies, and other 'financial institutions.' These parties should reassess their compliance risk under the AML/CFT rules. The consequences of these risks are important. For example, the loss of reputation from being brushed with the taint of money laundering can sink a business.
In the Marketplace
September 29, 2006
Highlights of the latest equipment leasing news from around the country.
Dealing with Insurers in Liquidation
September 29, 2006
Part One of this article discussed state insolvency statutes and how liquidation remains a state regulator's remedy of last resort. The conclusion discusses the liquidator's broad powers; automatic stay of other proceedings; distribution plans; issues pertaining to claims; distribution and priorities; drop down; set-offs; and claims by third parties.
Keep Your Lease A Lease: Seventh Circuit Finds the Severability of a Contract Defeats Re-characterization
September 29, 2006
In the December 2005 issue of this publication, this author reviewed the Seventh Circuit's decision in <i>United Air Lines, Inc. v. HSBC Bank USA, N.A.</i>, 416 F.3d 609 (7th Cir. 2005) (<i>'United I'</i>). In that decision, the Seventh Circuit was asked to determine whether a transaction involving land at the San Francisco airport that was denominated as a lease in the agreement would be treated as a lease for bankruptcy purposes. The Seventh Circuit held that it would look at the substance of the transaction and beyond the form and labels imposed by the parties' documentation.
When Is Equipment Not 'Equipment'? Inventory Leasing or Leasing to Rental Companies
September 29, 2006
It is not unusual for a finance lessor to discover that its Lessee intends to enter into a contract with a third party whereby the Lessee delivers possession of the leased equipment to that third party. Although many finance lessors may be aware of the practical risks associated with having its leased property/collateral in the hands of a third party, many are unaware of the increased legal risks that result from such a situation. This article addresses some of the key issues. For the sake of clarity, the third party receiving possession and control of the leased equipment will be referred to as a 'Sublessee,' and the agreement between the Lessee and the Sublessee will be referred to as a 'Sublease.' It should be noted that a contract of service pursuant to which the Sublessee receives possession also constitutes a 'Sublease' for purposes of this article.
Leasing Grows in Latin America
September 01, 2006
According to a recent report by the Alta Group Latin American Region ('LAR'), equipment leasing volume in Latin American countries increased by more than 50% on average in 2005. The Alta LAR 100 report, which includes the firm's second annual ranking of the Top 100 leasing companies in Latin America, has expanded with new information revealing the region's fastest-growing businesses, key multinationals, and growth in each country. Rafael Castillo-Triana, principal for The Alta Group LAR, noted that 'Brazil, which has the largest leasing industry in the region, experienced tremendous growth and almost doubled in size.' In addition, 'The report also shows that Argen-tina's leasing industry is recovering from the downturn following the country's economic crisis of 2002.'
In the Marketplace
September 01, 2006
Highlights of the latest equipment leasing news from around the country.
Financial Restatement Due to Lease Misclassification Not Actionable
September 01, 2006
As internal control issues continue to emerge for public companies, one of the questions that a leasing or financial services company might likely be asking is what happens if we need to restate our earnings based on a misclassification of our leases as sales-type leases rather than operating leases. What would our exposure be?
