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Banking and Finance Laws Bankruptcy Commercial Law

Using a True Lease or a TRAC Lease

Potential Complications in Bankruptcy

An equipment financing company will often decide whether it wants a transaction to be a true lease or a TRAC lease as opposed to a retail sale. A good reason to be able to make the distinction is to determine what might be the best structure for an equipment financier. This article explores the differences.

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An equipment financing company will often decide whether it wants a transaction to be a true lease or a TRAC lease as opposed to a retail sale. A good reason to be able to make the distinction is to determine what might be the best structure for an equipment financier. This article explores the differences. We also consider what might happen when a lessee/buyer files a bankruptcy proceeding and the judge determines that the deal (that was carefully made a true lease or a TRAC lease) is a determined by the court to be a disguised retail sales agreement.

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