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Ninth Circuit BAP Holds Lease Payment Streams Are Not Chattel Paper
In August 2006 the U.S. Bankruptcy Appellate Panel of the Ninth Circuit rendered a decision in a case titled In Re: Commercial Money Center, Inc. (Netbank, FSB v. Kipperman), U.S. Bankruptcy Appellate Panel of the Ninth Circuit, BAP No. SC-05-1238-MoTB; Bk.No. 02-09721-H7; Adv. No. 03-90331-H7, holding that payment streams stripped from equipment leases are payment intangibles, not chattel paper, and thereby overturning the bankruptcy court decision. Accordingly, the assignment of the payment streams could be automatically perfected under '9-309(3) of Revised Article 9. Additionally, the court agreed with the bankruptcy court and held that the transactions in this case were loans, not sales, so there was no automatic perfection. Finally, the court held that there were unresolved factual and legal issues as to whether the lender had perfected its security interest in the leases by taking possession through a third-party agent, and therefore remanded the case for further proceedings.
The facts are relatively straightforward. The debtor, Commercial Money Center, leased equipment to lessees with sub-prime credit and assigned its contractual rights to future lease payments to NetBank. As part of the transaction, the debtor obtained a surety bond guaranteeing the payments and assigned its rights under the surety bond to NetBank. In addition, the debtor granted to NetBank a security interest in the underlying leases and other property. Each transaction involved a Sale and Servicing Agreement ('SSA') among NetBank, the debtor, and the surety.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
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The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.