Come 'Hell or High Water' NorVergence Causing a Stir over Documentation
April 01, 2005
So-called "hell or high water," "waiver of defense" and lessor favorable "submission to jurisdiction" clauses have long been cornerstones of equipment finance documentation. But, the unfolding debacle over the last year involving a company called NorVergence has cast an unfavorable light on these important provisions and, in doing so, entangled most of the top players in the leasing industry.
Selling the State's Zoning Exemption?
March 31, 2005
The Court of Appeals recently confronted a significant zoning issue: When, and on what terms, can the state or a state agency transfer to a private entity its exemption from local zoning restrictions? In <i>Matter of Crown Communication New York, Inc. v. Department of Transportation</i> (NYLJ 2/14/05, p. 19, col. 4), a divided court held that telecommunications towers erected on state land were immune from local zoning regulations even when the much of the space on the towers had been leased to private companies. The court's decision, however, raises as many questions as it resolves.
Good News Out of Florida for Lessors
February 24, 2005
Decisions rendered by different courts in Florida provide good news for equipment lessors doing business in this state. One case supports a lessor's early termination charges challenged in a class action, and another supports the structure of a computer equipment lease as not being subject to documentary stamp taxes.
In The Marketplace
February 24, 2005
Highlights of the latest equipment leasing news from around the country.
FASB to Change Leveraged Lease Accounting Rules: LILO Settlements to Trigger Rerunning the Earnings
February 24, 2005
The Financial Accounting Standards Board met on Nov. 17, 2005 on the subject of the accounting impact of IRS settlements of Lease-In-Lease-Out ("LILO") and Lease-To-Service Contracts (aka "SILO"). To the surprise of the leasing industry, the FASB reached tentative conclusions that a change in the timing of cash flows requires a recalculation of the leveraged lease earnings and the lease classification should be re-examined. The recalculation of earnings results in a large, negative catch up adjustment and a positive adjustment to future earnings, but spread over the life of the lease. The lease classification issue should not be a problem.
A Senior Secured Lender's Guide to the Risks Posed By Junior Secured Debt
February 24, 2005
In theory, a borrower's issuance of junior secured debt is a boon for its senior secured lender. The borrower obtains additional capital, and the claims of the junior lender against shared collateral, since "subordinated," don't diminish the senior lender's prospects for repayment. In practice, however, a senior secured lender should view proposed junior secured financing skeptically because the existence of such debt can become highly problematic for the senior lender. The key to protecting the senior lender lies in properly negotiating and documenting the intercreditor agreement with the junior lender to eliminate, or at least minimize, the myriad ways in which the junior lender's rights may, in practice, limit — or even trump — those of the senior lender.
News Briefs
February 24, 2005
Highlights of the latest franchising news from around the country.
In the Spotlight: Internet Technologies Meet HVAC Components
February 24, 2005
Internet technologies are poised to revolutionize the heating, ventilation and air conditioning industry by enabling HVAC components to communicate not only with each other but with other building systems controls as well, and even with the enterprise business systems that have become essential to running large corporations, nonprofits and agencies.
