In The Marketplace
June 30, 2004
Highlights of the latest equipment leasing news from around the country.
The New World Order: Lessors Must Refocus
June 30, 2004
Over the last year, it has become obvious that there must be a fundamental shift in the way large-ticket leasing companies look at their tax shelter businesses. This article will examine what has brought about this shift and how lessors will find ways to cope with it.
Debtor Misconduct and Administrative Rejection Claims
June 30, 2004
Can a debtor's conduct give rise to an administrative rejection claim? The answer to this question was set forth in a memorandum opinion issued by U.S. Bankruptcy Judge Mary F. Walrath on March 31 in <i>The Matter Fleming Cos. Inc., et al., debtors,</i> Case No. 03-10945.
Ford Motor Credit Reaches Settlement with States over Leasing Practices
June 30, 2004
The office of the Michigan Attorney General has announced that it has reached a multistate settlement with Ford Motor Credit regarding its leasing practices. This settlement will affect more than 150,000 Ford customers and bring $485,500 to the state of Michigan in legal fees and costs.
Treasury Extends the 'Make Available' Provisions of the TRIA
June 30, 2004
In an announcement that comes as a relief to the leasing industry, the Treasury Department stated on June 18 that it will extend the "make available" provisions of the Terrorism Risk Insurance Act (TRIA) through 2005, the third year of the federal Terrorism Risk Insurance Program.
What You Need to Know about Preferences: Practical Considerations for Lessors
June 30, 2004
One of the most difficult conversations a bankruptcy lawyer can have with a client is explaining why it has been sued for the recovery of money received pre-petition from a debtor for services rendered or goods supplied. We often hear the same incredulous mantras: "But the [debtor] owed me the money ... for a long time." "We helped stave off bankruptcy because we extended the payment terms." Often these comments are made to the trustee or debtor who commenced the preference suit, before the creditor consults its attorney. The client believes the suit is a big misunderstanding because the payments it received were on account of a real debt and does not understand the admissions contained in its statements.
Circuit Court Win Sets Up Conflict over Bankruptcy Code
June 25, 2004
A recent circuit court decision regarding the interpretation of section 365 of the Bankruptcy Code has set up a conflict between two circuits. On March 15, 2004, the Court of Appeals for the First Circuit issued an opinion regarding whether bankruptcy debtors are required to cure non-monetary defaults prior to assuming unexpired leases under section 365 of the Bankruptcy Code, 11 U.S.C. ' 365. The First Circuit found -- expressly contrary to a holding of the Ninth Circuit Court of Appeals -- that debtors are not required to cure such defaults, resulting in a split in the circuits over a very widely used section of the code.
Is It a True Lease or a Loan?
June 01, 2004
The first part of this article, published in last month's issue, addressed the importance of the distinction between true leases and loans and began a detailed analysis of the rules that courts use for state law and bankruptcy purposes to determine the category in which a given transaction belongs. <br>As outlined in part one of this article, courts utilize the Two-Part Test provided in §1-201(37) of the Uniform Commercial Code, and any transaction that satisfies that Two-Part Test creates a security interest as a matter of law. The first prong of the test is satisfied if the lessee does not have the option of terminating the lease early or if any such early termination option requires the lessee to pay the lessor a significant sum. The second prong, which addresses the issues that are most often litigated, is discussed below.
In The Marketplace
June 01, 2004
Highlights of the latest equipment leasing news from around the country.
On-Site Sales: What Lessor's Counsel Should Know
June 01, 2004
When equipment lessors evaluate the risks of underwriting lease transactions for manufacturing equipment, one of the primary considerations in the credit decision is the resale value of the equipment in the event of default. In preparing for this risk, a key component of an underwriter's evaluation must be how to access and market the equipment in the event of a default. Therefore, it is critical to look at every transaction from the perspective of how much money a piece of equipment will bring in a sale, if there is an established market for the particular equipment, and also, how and where the equipment can best be marketed and sold if a liquidation is necessary. An often-overlooked and significant factor in this analysis is whether the lessor will have unfettered access to remove the equipment to sell, refurbish, and/or prepare for liquidation at the location where it has been used.
