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Kmart Bankruptcy: Lessons for Lessors and Secured Parties
One of the most fundamental and critical principles that enables the equipment leasing industry to function on a day-to-day basis is commercial certainty ' certainty in expectations regarding financing; certainty in the meaning of documentation; and reliance on the certainty of the application of legal principles that will be brought to bear in the event of a lease default or bankruptcy.
A currently pending proceeding in the massive Kmart bankruptcy challenges those underpinnings of certainty through the imaginative invocation of the 'equitable powers' of the Bankruptcy Court by a debtor-in-possession who may succeed in bringing about a result which is, by any standard, unfair, unanticipated and 'inequitable' ' at least in any commercial meaning of the word. [Note, On January 22, 2002, Kmart and its affiliate debtors filed a voluntary petition in the U.S. Bankruptcy Court for the Eastern District of Illinois seeking relief under Chapter 11 of Title 11 of U.S.C., 11 U.S.C. '' 101, et seq as amended. On January 24, 2003 Kmart filed its Joint Plan of Reorganization. The Plan was confirmed and Kmart emerged from Bankruptcy on May 5, 2003. Even though Kmart has emerged from Chapter 11, the Plan of Reorganization provided that if a motion for assumption was pending at the time of confirmation, that the Plan would not control, and the motions would.]
By way of background, Kmart entered into a Master Lease Agreement with Varilease Technology Group, Inc. on October 5, 2000. Kmart, at different times thereafter, entered into 26 separate and distinct Equipment Schedules pursuant to the Master Lease. The pieces of equipment covered on each Schedule were various items of photo-lab processing equipment, manufactured by Kodak and Noritsu, for use in different Kmart stores. Each Schedule: (a) incorporated the terms and conditions of the Master Lease, (b) described the equipment covered by serial number, and (c) listed a location where each piece of equipment was located.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Anti-Assignment Override Provisions
UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?