In the Marketplace
November 30, 2006
Highlights of the latest equipment leasing news from around the country.
The Credit Agency Reform Act: What Leasing Companies Need to Know
November 30, 2006
Any equipment leasing or finance company desiring to access the debt capital markets must quickly become adept at dealing with a unique feature of that world: the credit rating and its gatekeeper, the credit rating agency. Entering this realm can be a jolt for finance officers used to the relationship-friendly, competitive environment of commercial banks. Dominated by two monoliths, Standard & Poor's and Moody's, the rating agency process is steeped in the clinical analytics of credit modeling. Rating agencies are viewed by many as academic in perspective and, to some, remote and obscure in their approach.
Ninth Circuit BAP Holds Lease Payment Streams Are Not Chattel Paper
November 30, 2006
In August 2006 the U.S. Bankruptcy Appellate Panel of the Ninth Circuit rendered a decision in a case titled <i>In Re: Commercial Money Center, Inc.</i> (<i>Netbank, FSB v. Kipperman</i>), 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 Leasing Hotline
November 28, 2006
Highlights of the latest commercial leasing cases from around the country.
Understanding and Utilizing Percentage Rent Provisions
November 28, 2006
As retailers like to say, 'The three most important factors in retailing are location, location, location.' The real value of a retail lease, however, resides in the volume of sales produced at the location; therefore, the provider of the location — namely, the landlord — is a key player in the retailer's success. That is why percentage rent has developed in retail leases as a way by which the landlord that provides a successful location might share to some degree in that success.
