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Equipment Leasing-Leveraged Leasing (5th Edition)
 by Ian Shrank, Arnold G. Gough, Jr.
 
 Copyright: 2010-2013
 Last Updated: September 2013

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  • ISBN Number: 9781402414947
  • Page Count: 3104
  • Number of Volumes: 3
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  • The purchase of PLI titles may include Basic Upkeep Service, whereby
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Hailed as ”authoritative” by The Tax Executive, PLI’s Equipment Leasing-Leveraged Leasing is the trusted tool to turn to when structuring and documenting leasing transactions.

Equipment Leasing-Leveraged Leasing is a trusted tool to turn to when structuring and documenting leasing transactions. More than thirty leading leasing authorities provide you with the comprehensive legal, tax, economic, accounting, environmental, and insurance information and advice you need to develop and implement leasing deals that maximize rewards and minimize risks. The title has been recently updated to reflect relevant provisions of the American Recovery and Reinvestment Act of 2009 and to describe the impact of greenhouse gas emission initiatives on this area.

Featuring hundreds of pages of sample forms, checklists, and documents that expedite successful transactions, this highly accessible treatise shows you how to comply with complex laws governing leasing deals; determine whether it’s better for your client to lease or buy; structure and draft agreements of any kind or size; achieve specific goals for your clients, whether they are lessors, lessees, or lenders; effectively handle problems specific to certain kinds of leasing; and minimize legal and financial risks, including warranty, environmental, and tort liability, bankruptcy risks, and the risks associated with originating leases and loans through the Internet.
 
”[Equipment Leasing-Leveraged Leasing is] the most comprehensive guide on equipment leasing-leveraged leasing.”
 —Joseph A. Beham, Vice President, Capital Markets Group, Dana Commercial Credit Corporation

”[Equipment Leasing-Leveraged Leasing is] the most thorough and informative source of information I’ve seen on the topic.” 
 —Sue G. Nelson, Vice President, Corporate Finance, GATX Capital Corporation

“[Equipment Leasing-Leveraged Leasing is] essential reading.” 
 —American Association of Equipment Lessors News Bulletin

”This definitive work continues to be the standard by which all others are measured.” 
 —Barkley Clark, Shook, Hardy & Bacon, Kansas City, Missouri

  Table of Contents
  Preface
Chapter 1: Basics of Leasing Ian Shrank ~
  • § 1:1 : Introduction1-2
  • § 1:2 : Historical Background1-2
    • § 1:2.1 : Antecedents to Leasing1-2
    • § 1:2.2 : Modern Era1-5
  • § 1:3 : What Is a Lease?1-8
    • § 1:3.1 : True Lease Concepts1-8
    • § 1:3.2 : Basic Lease Issues1-9
    • § 1:3.3 : Net Versus Operating Leases1-10
  • § 1:4 : Why Engage in Leasing?1-12
    • § 1:4.1 : Limited Need and Residual Risk1-12
    • § 1:4.2 : Accounting Benefits1-13
    • § 1:4.3 : Tax Advantages1-14
    • § 1:4.4 : Other Lessee Motivations1-16
    • § 1:4.5 : Other Lessor Motivations1-17
    • § 1:4.6 : Lender Motivations1-18
  • § 1:5 : Structure of a Typical Leveraged Lease1-19
    • § 1:5.1 : Simple Version1-19
    • § 1:5.2 : Use of Trustees1-19
    • § 1:5.3 : Mechanics of the Leveraged Lease1-22
  • § 1:6 : Other Structures1-24
  • § 1:7 : How Does a Lease Happen?1-24
    • Chapter 2: General Governing Law: U.C.C. Articles 1, 2A, and 9 Robert D Strauss ~ Troutman Sanders LLP
  • § 2:1 : U.C.C. Article 2A—Leases2-2
    • § 2:1.1 : Background and Scope of U.C.C. Article 2A2-2
    • § 2:1.2 : Comparison of Articles 2 and 2A2-4
    • § 2:1.3 : Freedom of Contract2-4
    • § 2:1.4 : Definition of True “Lease”2-4
      • [A] : Why the Definition Is Necessary2-4
      • [B] : What the Definitions of “Lease” and “Security Interest” Cover, and What They Do Not Cover2-6
      • [C] : TRAC Leases—An Unfortunate Aberration2-10
      • [D] : What the Drafter Can (and Cannot) Change2-11
    • § 2:1.5 : Warranty Liability of Lessors; Treatment of “Finance Lessors”2-11
      • [A] : Warranty Rules for Leases Before Adoption of Article 2A2-11
      • [B] : Warranty Rules Under U.C.C. Article 2A2-12
      • [C] : U.C.C. Article 2A’s Definition of “Finance Lease”2-13
      • [D] : Practical Implications2-13
    • § 2:1.6 : Nonbankruptcy Enforcement, Remedies, and Damages for Lessors and Lessees2-14
      • [A] : Why Article 2A Needed to Cover Remedies2-14
      • [B] : How Article 2A Covers the Lessor’s Remedies2-15
      • [C] : Lessee’s Remedies for Lessor’s Breach2-20
      • [D] : Drafting Recommendations2-21
    • § 2:1.7 : Fixtures and Accessions2-22
      • [A] : Fixtures2-22
      • [B] : Accessions2-24
    • § 2:1.8 : Filing Requirements2-24
    • § 2:1.9 : Limits on Assignment and Subleasing2-25
      • [A] : “Conspicuousness” Requirement in 1987 (Unamended) Text2-25
      • [B] : Anti-Anti-Assignment Rules2-25
      • [C] : Effect on Lease or Lease Portfolio Lenders2-25
    • § 2:1.10 : Miscellaneous Provisions of Article 2A2-26
      • [A] : Statutory “Hell or High Water” Clause2-26
      • [B] : “Vendor in Possession” Laws2-28
      • [C] : Priorities in Favor of (Sub)Lessees in the Ordinary Course of Business2-28
      • [D] : Separate Signature for “No Oral Modifications” Clause2-28
      • [E] : Risk of Loss2-29
    • § 2:1.11 : Unresolved Issues in Article 2A2-29
    • § 2:1.12 : Proposed Amendments to Article 2A2-30
  • § 2:2 : Assignment of Leases; Assignment or Purchase of Lease Rentals2-32
    • § 2:2.1 : Applicability of Article 9 to Assignments2-32
      • [A] : Perfection As to the Lessor’s Rights in the Lease2-32
      • [B] : Perfection As to the Leased Goods2-33
      • [C] : Perfection Against the Lessee2-33
      • [D] : Lessee’s Consent to Assignment2-33
    • § 2:2.2 : Waiver of Defenses Clauses; “Hell or High Water” Clauses2-34
      • [A] : “Close-Connectedness” Doctrine2-35
  • § 2:3 : U.C.C. § 1-2032-36
    • Chapter 3: Tax Considerations William A Macan ~
    Michael G Robinson ~ Winston & Strawn LLP
  • § 3:1 : Introduction3-7
  • § 3:2 : Tax Ownership—True Lease3-11
    • § 3:2.1 : Fundamentals3-11
    • § 3:2.2 : Legal Background3-12
      • [A] : Supreme Court3-12
      • [B] : Other Courts3-15
      • [C] : IRS3-16
    • § 3:2.3 : Issues3-19
      • [A] : Initial Equity Investment3-21
        • [A][1] : Legal Background3-22
        • [A][2] : Guidelines Formulation of Initial Equity Investment Requirement3-26
        • [A][3] : Refinements of Initial Investment Requirement: “Unconditional Investment”; “No Return”3-27
          • [A][3][a] : Background and Legal Context3-27
        • [A][4] : “Unconditional Obligation”3-29
          • [A][4][a] : Common Problems3-29
          • [A][4][b] : “Deferred Equity” Arrangements3-31
        • [A][5] : No Return of Minimum Investment3-32
          • [A][5][a] : Casualty and Default Provisions3-32
          • [A][5][b] : Voluntary Termination by Lessee3-34
          • [A][5][c] : “Return” by Non-Lessee-Group Person/Third-Party Residential Value Insurance3-34
      • [B] : Lessor’s Continuing Investment in the Property During the Term of the Transaction3-36
        • [B][1] : Method of Analysis: Form of Presentation3-38
        • [B][2] : “Net Lease”3-39
        • [B][3] : “Accreting” Debt Balance3-40
      • [C] : Investment at Lease Termination3-40
        • [C][1] : Useful Life and Residual Value3-40
        • [C][2] : Guidelines Requirements Regarding Residual Expectation3-41
          • [C][2][a] : Removal Costs3-42
          • [C][2][b] : Inflation3-43
          • [C][2][c] : Case Law and Observations3-45
        • [C][3] : End of Lease Term Renewal Rights3-46
        • [C][4] : Evergreen and Wintergreen Renewal Options3-49
        • [C][5] : Lessee Purchase Options3-52
        • [C][6] : Fixed-Price Purchase Options3-59
          • [C][6][a] : End-of-Term Options3-59
          • [C][6][b] : Early Buyout Options3-62
          • [C][6][c] : Compulsion Issues3-63
        • [C][7] : Lessor Puts and Abandonment Rights3-64
        • [C][8] : “TRAC” Provisions—Qualified Motor Vehicle Leases3-67
      • [D] : Lessee Investment and Lessee Debt3-76
        • [D][1] : Lessee Participation in Cost3-77
          • [D][1][a] : Cost Overruns3-78
          • [D][1][b] : Determining Costs3-79
          • [D][1][c] : Transaction Costs3-80
        • [D][2] : Lessor’s Cost Versus Lessee’s Cost Versus Fair Market Value3-81
        • [D][3] : Lessee Improvements3-86
        • [D][4] : Lessee Loans and Debt Guarantees3-90
        • [D][5] : Other Lessee Involvement with Lessor’s Debt3-94
        • [D][6] : Lease Guarantees3-96
      • [E] : Limited Use Property3-99
      • [F] : Remarketing and Residual Fees3-103
      • [G] : Economic Substance and Profit Motive3-105
        • [G][1] : Economic Substance—Case Law3-106
        • [G][2] : Economic Substance—IRS Guidelines and Rulings3-113
        • [G][3] : Economic Substance—Code Section 7701(o)3-116
          • [G][3][a] : Applicability to Lease Transactions3-117
            • [G][3][a][i] : “Meaningful Change in Economic Position”3-120
            • [G][3][a][ii] : “Substantial Business Purpose”3-121
  • § 3:3 : Ownership Issue—Form of Ownership3-124
    • § 3:3.1 : Owner Trustee As Owner-Lessor3-124
      • [A] : Agency3-125
      • [B] : Grantor Trust3-125
      • [C] : Business Entity—“Check-the-Box”3-128
    • § 3:3.2 : Subsidiary As Owner Participant3-130
    • § 3:3.3 : Multiple-Owner Participants3-131
    • § 3:3.4 : Cotenancy and Separate Ownership3-133
  • § 3:4 : Tax Attributes3-138
    • § 3:4.1 : Depreciation3-138
      • [A] : Background3-138
      • [B] : MACRS3-143
        • [B][1] : General Rules3-143
        • [B][2] : First-Year Conventions3-144
        • [B][3] : Placement in Service3-146
        • [B][4] : Foreign-Use Property3-147
        • [B][5] : Tax-Exempt Use Property3-149
        • [B][6] : Substitution and Replacement3-150
        • [B][7] : “Bonus Depreciation”3-150
      • [C] : Leasehold Interest—Capital Recovery3-152
    • § 3:4.2 : Interest Expense and Other Debt Issues3-153
      • [A] : Interest Deduction3-153
      • [B] : Withholding Tax Issues3-155
    • § 3:4.3 : Transactions Costs3-156
      • [A] : Costs Incurred to Acquire the Leased Asset3-157
      • [B] : Costs Incurred in Connection with Leasing of an Asset3-157
      • [C] : Costs Incurred in Financing an Asset3-158
      • [D] : Conclusion3-158
    • § 3:4.4 : Investment Credits (and Grants)—Renewable Energy Property3-159
      • [A] : Investment Tax Credit for Energy Property3-160
        • [A][1] : General Requirements—Energy Property3-161
        • [A][2] : Limitations, Exclusions, and Further Requirements3-162
          • [A][2][a] : Qualified Rehabilitation Expenditures3-162
          • [A][2][b] : Property Used Predominantly Outside the United States, and Tax-Exempt Use Property3-163
      • [B] : Adjustments to Basis/Recapture3-163
      • [C] : Pass-Through Election3-164
      • [D] : Government Grant in Lieu of Investment Credit3-164
        • [D][1] : General Requirements for the Grant3-164
        • [D][2] : Pass-Through of the Grant3-165
    • § 3:4.5 : Accounting for Rental Income; Code Section 4673-166
      • [A] : Section 467—Background3-168
      • [B] : Section 467 Regulations—An Overview3-168
      • [C] : The Definition of a “Section 467 Rental Agreement”3-169
        • [C][1] : Specific Allocation of Fixed Rent3-169
        • [C][2] : Increasing or Decreasing Rents3-171
        • [C][3] : Prepaid or Deferred Rents3-171
      • [D] : The Treatment of “Section 467 Rental Agreements”3-173
        • [D][1] : Disqualified Leaseback or Long-Term Agreement3-174
        • [D][2] : Tax Avoidance As a Principal Purpose3-174
          • [D][2][a] : General Rule—A Question of Fact3-174
          • [D][2][b] : The Safe Harbors3-175
        • [D][3] : Applying the Uneven Rent Safe Harbor to a Lease3-176
          • [D][3][a] : Average Annual Rent Allocated3-176
          • [D][3][b] : Annual Rent Allocated3-177
          • [D][3][c] : Treatment of Supplemental Rent3-178
      • [E] : Section 467 Loans3-180
        • [E][1] : Section 467 Rent3-180
          • [E][1][a] : Proportional Accrual Method Rules3-180
          • [E][1][b] : Prepayments with “Adequate Stated Interest”3-183
        • [E][2] : Section 467 Interest3-184
      • [F] : Floating Rate Debt and Refinancings3-185
      • [G] : Consequence of DLLTA Treatment3-187
      • [H] : “Rent Stripping”3-189
    • § 3:4.6 : Like-Kind Exchanges3-192
      • [A] : Introduction3-192
      • [B] : Basic Requirements of a Like-Kind Exchange3-193
      • [C] : Deferred Exchanges3-195
      • [D] : Gain Recognition3-197
      • [E] : Other Considerations3-197
    • § 3:4.7 : Foreign Tax Credit Issues3-198
      • [A] : Foreign-Source Losses3-198
      • [B] : Allocation of Interest Expense3-200
    • § 3:4.8 : Other Foreign-Related Considerations3-201
      • [A] : Taxation of Foreign Currency Exchange Rate Gains and Losses3-201
    • § 3:4.9 : Alternative Minimum Tax3-205
  • § 3:5 : Disclosure and List-Keeping Rules, Tax Return Positions and Penalties3-206
    • § 3:5.1 : Reportable Transaction Disclosure and List-Keeping Requirements3-207
      • [A] : Taxpayer Disclosure of Reportable Transactions (Code Section 6011)3-208
      • [B] : Material Advisor Disclosure of Reportable Transactions (Code Section 6111)3-212
      • [C] : List-Keeping with Respect to Reportable Transactions (Code Section 6112)3-214
    • § 3:5.2 : Penalties for Failure to Disclose or Failure to Maintain List (Code Sections 6707, 6707A, 6708)3-216
    • § 3:5.3 : Other Penalty Provisions Applicable to Taxpayer’s Participation in Leasing Transaction3-218
      • [A] : Substantial Understatement Penalty (Code Section 6662)3-218
      • [B] : Reportable Transaction Understatements (Code Section 6662A)3-218
  • § 3:6 : Indemnification3-220
    • § 3:6.1 : Special Tax Indemnity Agreement3-220
    • § 3:6.2 : General Tax Indemnity3-230
    • Chapter 4: Accounting Jeffrey H. Ellis ~ Huron Consulting Group
  • § 4:1 : Introduction4-3
  • § 4:2 : Background4-4
  • § 4:3 : Objectives4-5
  • § 4:4 : Lease Classification4-6
    • § 4:4.1 : Definition of Terms4-6
    • § 4:4.2 : Criteria for a Capital Lease4-7
    • § 4:4.3 : Lessee Classification4-7
    • § 4:4.4 : Lessor Classification4-8
    • § 4:4.5 : Criteria 1a, 1b, and 1c4-9
    • § 4:4.6 : Criterion 1d4-10
  • § 4:5 : Lessee/Lessor Accounting and Disclosures4-10
    • § 4:5.1 : Lessee Accounting4-10
    • § 4:5.2 : Lessor Accounting4-11
    • § 4:5.3 : Disclosures4-12
    • § 4:5.4 : Other Provisions4-13
  • § 4:6 : Implementation Problems4-14
    • § 4:6.1 : Part of a Building4-14
    • § 4:6.2 : Residual Value Guarantee4-15
    • § 4:6.3 : Contingent Rents4-17
    • § 4:6.4 : Interest Rate Implicit in the Lease4-19
    • § 4:6.5 : Gain and Loss Recognition on Sale-Leasebacks4-20
    • § 4:6.6 : Sale-Leasebacks of Real Estate4-21
    • § 4:6.7 : Sale-Leasebacks of Integral Equipment4-22
    • § 4:6.8 : Lease Term4-23
    • § 4:6.9 : Leveraged Leases4-24
    • § 4:6.10 : Variable Interest Entities and Consolidation Issues4-25
      • [A] : Impact of ASC Topic 810 on Leveraged Lease Arrangements4-27
      • [B] : Multi-Party Lease Transactions4-28
      • [C] : International Convergence4-28
    • § 4:6.11 : Double-Dip Leases4-29
    • § 4:6.12 : Leases Involving Government Facilities4-30
    • § 4:6.13 : Initial Direct Costs4-31
    • § 4:6.14 : Build-to-Suit Issues4-31
    • § 4:6.15 : Environmental Indemnification4-33
    • § 4:6.16 : Events of Default4-34
    • § 4:6.17 : Computer Hardware and Software4-35
    • § 4:6.18 : Other FASB, EITF, and SEC Activity4-36
      • [A] : Changes in the Provisions of Lease Agreements Resulting from Refundings of Tax-Exempt Debt4-37
      • [B] : Inception of the Lease4-37
      • [C] : Profit Recognition on Sales-Type Leases of Real Estate4-37
      • [D] : Classification of Renewals or Extensions of Existing Sales-Type or Direct Financing Leases4-38
      • [E] : Accounting for Leases in a Business Combination4-39
      • [F] : Accounting for Purchase of a Leased Asset by the Lessee During the Term of the Lease4-39
      • [G] : Accounting for a Loss on a Sublease4-40
      • [H] : Upward Adjustments of Guaranteed Residual Values4-40
      • [I] : Leases to Government Units4-41
      • [J] : Accounting for an Interest in the Residual Value of a Leased Asset4-41
      • [K] : Time Pattern of the Physical Use of Property in an Operating Lease4-42
      • [L] : Lease Incentives in an Operating Lease4-42
      • [M] : Applicability of Leveraged-Lease Accounting to Existing Assets of the Lessor4-43
      • [N] : Money-over-Money Lease Transactions4-44
      • [O] : Wrap Lease Transactions4-44
      • [P] : Sales of Assets Subject to Operating Leases and “Nondiscriminatory” Remarketing Agreements4-45
      • [Q] : Income Taxes4-45
      • [R] : Defeased Lease Obligations4-45
      • [S] : Lessee Recognition of Guarantees and Indemnifications4-46
      • [T] : Residual Value Insurance4-47
      • [U] : Determining When a Service or Supply Contract Contains a Lease4-47
      • [V] : Identifying Intangible Assets in Acquisition of Income-Producing Properties4-48
      • [W] : Period for Amortizing Leasehold Improvements4-48
      • [X] : Changes in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease4-50
      • [Y] : Accounting for Maintenance Services4-51
  • § 4:7 : Symmetry4-52
  • § 4:8 : Future Outlook4-53
  • Appendix 4A : Lessee Lease Classification Flow ChartApp. 4A-1
  • Appendix 4B : Lessor Lease Classification Flow ChartApp. 4B-1
  • Appendix 4C : FASB Statements, Interpretations, Technical Bulletins and Staff Positions, and Leasing-Related Issues of the FASB’s Emerging Issues Task Force As of July 1, 2012 Incorporated into ASC Topic 840App. 4C-1
    • Chapter 5: The Economics of Leveraged Leasing James C Ahlstrom ~ Interet Inc
    Iris C Engelson ~ Interet Corporation
    Victor Sirelson ~ Interet Corporation
  • § 5:1 : Introduction5-2
  • § 5:2 : The Classic U.S. Leveraged Lease5-3
    • § 5:2.1 : Before-Tax Analysis5-4
    • § 5:2.2 : Tax Benefits5-4
    • § 5:2.3 : After-Tax Yield5-7
    • § 5:2.4 : Before-Tax Yield5-10
    • § 5:2.5 : Effective Yield5-10
    • § 5:2.6 : Book Earnings5-11
    • § 5:2.7 : Sinking Fund Risk5-12
    • § 5:2.8 : Residual Value Risk5-13
    • § 5:2.9 : Credit Risk5-13
    • § 5:2.10 : Tax Rate Change Risk5-14
    • § 5:2.11 : Tax Base Risk5-15
    • § 5:2.12 : Alternative Minimum Tax Risk5-15
    • § 5:2.13 : Termination Values5-16
    • § 5:2.14 : Early Buyout Option5-16
    • § 5:2.15 : IRS Guidelines5-17
  • § 5:3 : Rent and Debt Structuring5-19
    • § 5:3.1 : Linear Programming Models5-20
    • § 5:3.2 : Mathematical Framework for Linear Programming5-21
    • § 5:3.3 : Integer Programming Models5-23
  • § 5:4 : Specialized Lease Structures5-25
    • § 5:4.1 : 467 Regulations5-25
    • § 5:4.2 : Effect of ITC5-28
  • § 5:5 : Search for Higher Yields5-28
  • § 5:6 : Return on Equity and Assets5-31
  • § 5:7 : Mathematics of Yield5-32
    • § 5:7.1 : The Meaning of Yield5-35
  • § 5:8 : Lessee Economics5-39
    • § 5:8.1 : Lease Capitalization5-41
    • § 5:8.2 : The Lessee’s Rent Cost Comparison5-41
    • § 5:8.3 : Lease-Buy Analysis5-42
  • Appendix 5A : Example ReportsApp. 5A-1
    • Chapter 6: Documentation Ian Shrank ~
  • § 6:1 : Introduction6-6
  • § 6:2 : Term Sheet or Commitment Letter6-7
    • § 6:2.1 : Preliminary Proposal6-7
    • § 6:2.2 : Letter of Intent6-8
    • § 6:2.3 : Commitment Letter6-8
    • § 6:2.4 : When Is a Preliminary Document Legally Binding?6-11
    • § 6:2.5 : Commitment Letter Text6-13
      • [A] : Who, How Much, and When?6-13
      • [B] : Appraisal6-14
      • [C] : Economics6-14
      • [D] : Who Drafts?6-15
      • [E] : Closing Conditions6-16
  • § 6:3 : Participation Agreement6-16
    • § 6:3.1 : Commitments of the Parties6-16
      • [A] : Mechanics6-16
      • [B] : Delayed Closing6-17
      • [C] : Uncertain Purchase Price6-18
      • [D] : Best Efforts6-18
    • § 6:3.2 : Conditions to Closing6-20
      • [A] : Corporate Formalities6-20
      • [B] : Documentation Conditions6-21
      • [C] : Title Issues6-21
      • [D] : Liens6-22
      • [E] : Insurance6-23
      • [F] : Legal Opinions6-23
      • [G] : Appraisal6-26
      • [H] : Other Conditions6-27
    • § 6:3.3 : Indemnities6-27
      • [A] : General Indemnity Scope6-28
      • [B] : General Indemnity Procedure6-30
    • § 6:3.4 : Representations and Warranties6-32
      • [A] : Lessee Representations6-32
      • [B] : Owner Participant Representations6-34
      • [C] : Owner Trustee Representations6-35
      • [D] : Indenture Trustee Representations6-35
      • [E] : Loan Participant Representations6-35
    • § 6:3.5 : Other Covenants6-36
      • [A] : Debt Refinancing6-36
      • [B] : Financial Covenants6-38
      • [C] : Change of Owner Trust Situs6-40
      • [D] : Transaction Expenses6-40
      • [E] : Deferred Equity6-42
      • [F] : Lessor Liens and Federal Tax Liens6-43
      • [G] : Amendments to Documents6-43
      • [H] : Purchase of Notes6-43
      • [I] : Special Purpose Covenants6-44
      • [J] : Section 1111(b)6-44
      • [K] : Mitigation6-45
    • § 6:3.6 : Transfer Provisions6-45
      • [A] : Loan Participant Transfers6-46
      • [B] : Owner Participant Transfers6-46
      • [C] : U.C.C. Restrictions on Assignment Clauses6-49
    • § 6:3.7 : Sale-Leasebacks: Tax and Fraudulent Conveyance Issues6-50
      • [A] : Use Tax6-50
      • [B] : Fraudulent Conveyance6-51
    • § 6:3.8 : Miscellaneous Provisions6-51
      • [A] : Further Assurances6-51
      • [B] : Governing Law and Jurisdiction6-51
      • [C] : Other Clauses6-53
      • [D] : Nonrecourse Provisions6-53
  • § 6:4 : Trust Agreement6-53
    • § 6:4.1 : Reasons for Use of an Owner Trust6-53
    • § 6:4.2 : Trust Agreement Text6-55
    • § 6:4.3 : Trustee As Agent6-57
  • § 6:5 : Trust Indenture and Security Agreement6-58
    • § 6:5.1 : Granting Clause6-58
    • § 6:5.2 : Excluded Payments and Rights6-60
      • [A] : Excluded Payments6-60
      • [B] : Excluded Rights6-61
    • § 6:5.3 : Terms of the Loan Certificates6-62
      • [A] : Payment Terms6-62
      • [B] : Nonrecourse Clause6-63
      • [C] : Payment Mechanics6-64
      • [D] : Registration of Loan Certificates6-64
      • [E] : Replacement of Loan Certificates6-65
    • § 6:5.4 : Distribution of Income6-65
      • [A] : Basic Rent6-66
      • [B] : Early Terminations6-66
      • [C] : Events of Default6-66
      • [D] : Other Distributions6-67
    • § 6:5.5 : Lessor Covenants6-67
    • § 6:5.6 : Defaults and Remedies6-68
      • [A] : Events of Default6-68
      • [B] : Remedies6-69
      • [C] : Cure Rights6-71
      • [D] : Purchase of Notes6-71
      • [E] : Squeeze Protection6-72
    • § 6:5.7 : Agent/Indenture Trustee Issues6-74
      • [A] : Voting6-74
      • [B] : Protections for Agent/Trustee6-74
      • [C] : Compensation6-75
      • [D] : Lessor Indemnity6-75
      • [E] : Replacement of Agent/Trustee6-76
    • § 6:5.8 : Amendments6-76
    • § 6:5.9 : Increased Costs and Illegality6-77
      • [A] : Increased Costs6-77
      • [B] : Illegality6-79
    • § 6:5.10 : Miscellaneous6-79
  • § 6:6 : Lease6-80
    • § 6:6.1 : True Lease Issues6-81
      • [A] : U.C.C. Filing and Granting Clause6-81
      • [B] : Warranties6-81
      • [C] : Remedies6-82
      • [D] : Installment Sales; Usury6-83
    • § 6:6.2 : Master Leases6-84
    • § 6:6.3 : Grant, Term, and Rent6-85
      • [A] : Grant6-85
      • [B] : Term6-85
      • [C] : Rent6-86
      • [D] : Supplemental Rent6-86
      • [E] : Mechanics of Payment6-87
      • [F] : Termination Values6-87
    • § 6:6.4 : Rent Adjustments6-88
      • [A] : Economic Assumptions6-88
      • [B] : Adjustment Process6-89
      • [C] : Net Lease; “Hell or High Water” Clause6-91
    • § 6:6.5 : Disclaimer of Warranties6-94
    • § 6:6.6 : Liens6-95
    • § 6:6.7 : Use6-97
    • § 6:6.8 : Maintenance6-98
    • § 6:6.9 : Possession and Subleasing6-99
    • § 6:6.10 : Modifications6-100
      • [A] : Required and Optional Modifications6-100
      • [B] : Financing of Modifications6-102
    • § 6:6.11 : Early Termination of Lease6-102
    • § 6:6.12 : Casualty6-105
    • § 6:6.13 : Insurance6-106
      • [A] : What Type and Amount of Insurance6-106
      • [B] : Required Insurance Terms6-107
    • § 6:6.14 : Reporting Requirements6-109
    • § 6:6.15 : Inspection6-110
    • § 6:6.16 : Return6-111
    • § 6:6.17 : Defaults6-112
    • § 6:6.18 : Remedies6-115
      • [A] : Article 2A Remedies6-115
      • [B] : Contractual Remedies6-116
      • [C] : Liquidated Damage Remedies6-117
        • [C][1] : The Article 2A Rules6-117
        • [C][2] : Common Contractual Variations6-118
        • [C][3] : How Courts Have Analyzed Enforceability of Liquidated Damages6-120
        • [C][4] : Termination Value Enforceability6-123
        • [C][5] : The Proper Enforceability Analysis of Termination Values As Liquidated Damages6-127
        • [C][6] : Bankruptcy Enforcement6-129
    • § 6:6.19 : Purchase Options6-130
      • [A] : End of Term6-130
      • [B] : Early Buyout Option6-133
      • [C] : Burdensome Buyout6-134
    • § 6:6.20 : Renewal Options6-135
    • § 6:6.21 : Consent to Collateral Assignment6-137
    • § 6:6.22 : Chattel Paper Clause6-137
    • § 6:6.23 : Right to Perform for Lessee6-138
    • § 6:6.24 : Investment of Funds6-138
    • § 6:6.25 : Miscellaneous Provisions6-139
  • § 6:7 : Purchase Agreement Assignment6-139
  • § 6:8 : Credit Enhancement6-140
    • § 6:8.1 : Guaranties6-140
      • [A] : Text6-140
      • [B] : Legal Issues6-141
    • § 6:8.2 : Letters of Credit6-143
      • [A] : Structure and Amount6-143
      • [B] : Drafting Issues6-145
      • [C] : Bankruptcy of Lessee6-146
    • § 6:8.3 : Sublease Assignments6-147
    • § 6:8.4 : Cash Deposits6-147
    • § 6:8.5 : Defeasance Arrangements6-148
      • [A] : Deposit6-149
      • [B] : Payment Undertaking Agreement6-150
      • [C] : Guarantied Investment Contract6-152
      • [D] : Securities6-153
    • § 6:8.6 : Security Agreements6-153
    • § 6:8.7 : Perfection6-154
      • [A] : Securities6-154
      • [B] : U.S. Treasury Securities6-156
      • [C] : Other Collateral6-157
      • [D] : Deposits6-158
    • § 6:8.8 : Other Secured Party Protections6-160
      • [A] : Credit Risk6-160
      • [B] : Voluntary Substitution6-162
      • [C] : Mark-to-Market6-162
      • [D] : Other Issues6-163
  • § 6:9 : Offshore Companies6-163
    • § 6:9.1 : Reasons for Use of Offshore Companies6-163
    • § 6:9.2 : Domicile, Ownership, and Structure6-164
    • § 6:9.3 : Protection for Risks6-165
    • § 6:9.4 : Intermediate Lease Issues6-166
  • § 6:10 : Lessee Mortgage6-167
  • § 6:11 : Real Estate and Facility Documents6-169
    • § 6:11.1 : Improvements6-169
      • [A] : Paying Twice6-169
      • [B] : Tax Risks6-170
      • [C] : Early Terminations6-171
      • [D] : Improvements Financing6-171
    • § 6:11.2 : Maintenance and Return6-172
    • § 6:11.3 : Support and Sharing Agreements6-173
    • § 6:11.4 : Ground Lease6-175
      • [A] : Term and Rent6-176
      • [B] : Operational Provisions6-177
      • [C] : Insurance and Casualty6-178
      • [D] : Subleasing and Assignment6-178
      • [E] : Return6-179
      • [F] : Defaults and Remedies6-180
  • § 6:12 : Termination of Leveraged Leases6-180
    • § 6:12.1 : End-of-Term Termination6-181
      • [A] : End-of-Term Termination with Purchase Option6-181
        • [A][1] : Survival6-182
        • [A][2] : Legal Fees6-182
        • [A][3] : Representations6-182
        • [A][4] : Transfer Taxes6-183
        • [A][5] : Closing Documents6-183
      • [B] : End-of-Term Termination with Return of Assets6-183
    • § 6:12.2 : Early Termination6-184
      • [A] : Determining Termination Value6-185
      • [B] : Other Issues6-186
    • § 6:12.3 : Menendez Risk6-188
      • [A] : Background6-188
      • [B] : Closing the SILO/LILO Loophole6-189
  • Appendix 6A : Participation AgreementApp. 6A-1
  • Appendix 6B : Lease AgreementApp. 6B-1
  • Appendix 6C : Trust Indenture and Security AgreementApp. 6C-1
  • Appendix 6D : Trust AgreementApp. 6D-1
  • Appendix 6E : Purchase Agreement AssignmentApp. 6E-1
  • Appendix 6F : Tax Indemnity AgreementApp. 6F-1
  • Appendix 6G : GuarantyApp. 6G-1
  • Appendix 6H : Profitable Financial CorporationApp. 6H-1
  • Appendix 6I : Leasing AgreementApp. 6I-1
  • Appendix 6J : Federal Tax LiensApp. 6J-1
  • Appendix 6K : Fraudulent Transfer LawApp. 6K-1
  • Appendix 6L : Owner Trustee As AgentApp. 6L-1
  • Appendix 6M : Purchase Agreement; Assignment and Assumption AgreementApp. 6M-1
    • Chapter 7: Aircraft Dean Gerber ~ Vedder Price
  • § 7:1 : Introduction7-4
  • § 7:2 : Applicable Governing Law7-5
    • § 7:2.1 : Federal Preemption7-6
    • § 7:2.2 : National System for Recordation7-9
    • § 7:2.3 : Actual Notice7-10
    • § 7:2.4 : Validity7-11
    • § 7:2.5 : Priorities7-12
    • § 7:2.6 : Effective Time of Recording7-13
  • § 7:3 : Conventions and Treaties7-13
    • § 7:3.1 : Chicago Convention7-13
    • § 7:3.2 : Geneva Convention7-14
    • § 7:3.3 : Cape Town Convention7-16
      • [A] : International Interests7-20
      • [B] : Aircraft Objects7-21
      • [C] : Applicability of Cape Town Convention7-23
      • [D] : Formal Requirements7-24
      • [E] : Other Registerable Interests7-26
      • [F] : Effects of Registration of an International Interest7-27
      • [G] : Assignment7-28
      • [H] : Jurisdiction7-30
      • [I] : Choice of Law7-30
      • [J] : Remedies7-31
      • [K] : Insolvency7-32
      • [L] : De-Registration7-34
      • [M] : Entry Point7-35
      • [N] : International Registry7-37
      • [O] : Transitional Provisions7-39
    • § 7:3.4 : Rome Convention7-41
  • § 7:4 : Registration and Ownership7-42
    • § 7:4.1 : Aircraft Registration and Citizenship7-42
      • [A] : Individuals7-46
      • [B] : Partnerships7-47
      • [C] : Corporations7-47
      • [D] : Limited Liability Corporations7-48
    • § 7:4.2 : Registration of Aircraft by Non-U.S. Citizens7-49
      • [A] : Owner Trust7-49
      • [B] : Voting Trust7-51
      • [C] : Based and Primarily Used7-52
      • [D] : Loss of Citizenship7-52
    • § 7:4.3 : Aircraft Not Previously Registered or Previously Registered in the United States7-53
    • § 7:4.4 : Aircraft Last Previously Registered in a Foreign Country7-54
    • § 7:4.5 : Repossessed and Foreclosed Aircraft7-54
    • § 7:4.6 : FAA’s Designation of Owner7-56
      • [A] : Effect on Local Law Determinations7-56
      • [B] : Leases Containing Purchase Options7-57
    • § 7:4.7 : Effective Time of Registration7-58
  • § 7:5 : Recordation of Interests in Aircraft7-59
    • § 7:5.1 : Airframes7-59
    • § 7:5.2 : Engines and Propellers7-60
    • § 7:5.3 : Spare Parts, Appliances and Nonspecifically Described Engines and Propellers7-61
    • § 7:5.4 : Filing Formalities7-62
    • § 7:5.5 : Non-Consensual Liens7-63
      • [A] : Mechanic’s Liens7-63
      • [B] : Judgment Liens and Tax Liens7-64
  • § 7:6 : Section 1110 of the U.S. Bankruptcy Code7-65
    • § 7:6.1 : Description of Section 1110 Generally7-65
    • § 7:6.2 : First Placed in Service7-73
    • § 7:6.3 : Section 1110 Requirements7-74
      • [A] : Equipment7-74
      • [B] : Financier7-74
      • [C] : Repossession Right7-76
      • [D] : Debtor7-76
  • § 7:7 : Aviation Insurance7-77
    • § 7:7.1 : Hull Insurance7-77
    • § 7:7.2 : Liability Insurance7-79
    • § 7:7.3 : War and Allied Perils Insurance7-80
    • § 7:7.4 : Typical Policy Provisions7-83
    • § 7:7.5 : Political Risk Insurance7-86
    • § 7:7.6 : AVN 67B7-88
  • § 7:8 : Liability Law As Applied to Financiers7-90
    • § 7:8.1 : State Liability Law7-90
    • § 7:8.2 : Federal Limitations of Liability7-91
  • § 7:9 : General Lease Provisions7-97
    • § 7:9.1 : Operation7-98
    • § 7:9.2 : Maintenance7-98
    • § 7:9.3 : Subleasing and Reregistration7-100
    • § 7:9.4 : Possession7-102
    • § 7:9.5 : Replacements on Events of Loss7-105
    • § 7:9.6 : “Truth-in-Leasing”7-106
    • § 7:9.7 : Return Conditions7-107
  • § 7:10 : Jurisdictional Review for Cross-Border Transactions7-109
    • § 7:10.1 : Minimum Criteria7-109
    • § 7:10.2 : Registration7-110
    • § 7:10.3 : Liens7-112
  • Appendix 7A : Convention on International Interests in Mobile EquipmentApp. 7A-1
  • Appendix 7B : Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft EquipmentApp. 7B-1
  • Appendix 7C : Registration Application—AC Form 8050-1App. 7C-1
  • Appendix 7D : Declaration of International OperationsApp. 7D-1
  • Appendix 7E : Aircraft Re-Registration Application—AC Form 8050-1AApp. 7E-1
  • Appendix 7F : Aircraft Bill of Sale—AC Form 8050-2App. 7F-1
  • Appendix 7G : Certificate of Repossession—AC Form 8050-4App. 7G-1
  • Appendix 7H : FAA Entry Point Filing Form International Registry—AC Form 8050-135App. 7H-1
  • Appendix 7I : AVN 48B—War, Hijacking and Other Perils Exclusion Clause (Aviation)App. 7I-1
  • Appendix 7J : AVN 48C—War, Hijacking and Other Perils Exclusion Clause (Aviation)App. 7J-1
  • Appendix 7K : AVN 51—Extended Coverage Endorsement (Aircraft Hulls)App. 7K-1
  • Appendix 7L : Extended Coverage Endorsement (Aviation Liabilities) AVN 52DApp. 7L-1
  • Appendix 7M : AVS 103—50/50 Provisional Claims Settlement ClauseApp. 7M-1
  • Appendix 7N : LSW 147—Repossession of Leased Equipment Insuring ConditionsApp. 7N-1
  • Appendix 7O : AVN 67B—Airline Finance/Lease Contract EndorsementApp. 7O-1
    • Chapter 8: Rolling Stock David P Graybeal ~ Nixon Peabody LLP
  • § 8:1 : Introduction8-3
  • § 8:2 : Industry Overview8-3
    • § 8:2.1 : Railroads8-3
    • § 8:2.2 : Rolling Stock8-5
    • § 8:2.3 : Locomotives8-5
  • § 8:3 : Association of American Railroads8-6
    • § 8:3.1 : Reporting Marks and Umler8-6
    • § 8:3.2 : Interchange Rules8-9
  • § 8:4 : Federal Laws Applicable to Railroads and Rail Equipment8-11
    • § 8:4.1 : Department of Transportation8-11
    • § 8:4.2 : Federal Railroad Administration8-12
      • [A] : Safety8-12
        • [A][1] : The Hazardous Materials Division8-13
        • [A][2] : Motive Power and Equipment Division8-13
      • [B] : Chief Counsel (Safety Law Division of the Office of Chief Counsel)8-13
    • § 8:4.3 : Surface Transportation Board8-13
    • § 8:4.4 : Office of the Secretary of Transportation8-14
    • § 8:4.5 : Office of the Inspector General8-14
    • § 8:4.6 : Research and Innovative Technology Administration8-15
    • § 8:4.7 : Regulation of Railroad Securities8-15
  • § 8:5 : Railroad Bankruptcy and Section 11688-16
    • § 8:5.1 : Overview8-16
    • § 8:5.2 : Section 11688-17
    • § 8:5.3 : Application of Section 11688-20
      • [A] : Debtor Must Be a Railroad8-20
      • [B] : Equipment Subject to Section 11688-20
      • [C] : Purchase Money Liens8-21
      • [D] : Rebuilt Equipment8-23
      • [E] : Cure of Defaults8-23
      • [F] : Debtor Agreement to Perform All Obligations8-24
  • § 8:6 : Perfection of Interests8-24
    • § 8:6.1 : Federal Law8-24
      • [A] : Equipment8-26
      • [B] : Assignments8-27
      • [C] : Security Interests8-27
      • [D] : U.C.C. Preemption Only in Respect of Perfection8-28
      • [E] : Recognition of Foreign Filings8-28
      • [F] : Mechanics of Filing8-29
    • § 8:6.2 : International Filings8-30
      • [A] : Canadian Filings8-31
      • [B] : Mexican Filings8-34
      • [C] : Rail Protocol to the Convention on International Interests in Mobile Equipment8-36
  • § 8:7 : Tax Issues Relating to Foreign Use of Rail Equipment8-39
    • § 8:7.1 : Predominant Use Abroad8-40
    • § 8:7.2 : Foreign-Source Issues8-41
  • § 8:8 : Environmental Risk8-42
    • § 8:8.1 : Railroad Accidents8-42
    • § 8:8.2 : CERCLA8-43
    • § 8:8.3 : Oil Pollution Act8-46
  • § 8:9 : Special Equipment Documentation Issues8-47
    • § 8:9.1 : Equipment Maintenance8-47
      • [A] : Industry Standard and the Interchange Rules8-48
      • [B] : Equipment Specific Considerations8-49
        • [B][1] : Locomotives8-49
        • [B][2] : Autoracks and Flatcars8-50
        • [B][3] : Tank Cars8-51
        • [B][4] : Refrigerated Cars8-51
    • § 8:9.2 : Return8-52
      • [A] : Return Location and Minimum Number8-52
      • [B] : Storage8-52
      • [C] : Return Inspection8-53
    • § 8:9.3 : Inspection Generally8-54
    • § 8:9.4 : Insurance8-55
    • § 8:9.5 : Section 1168: Lease Defaults and Equity Squeeze8-55
    • § 8:9.6 : Reporting Marks and Car Legends8-56
      • [A] : Reporting Marks8-56
      • [B] : Legends8-57
    • § 8:9.7 : Use in Mexico8-57
    • Chapter 9: Commercial Vessels Nancy L Hengen ~ Holland & Knight LLP
  • § 9:1 : Introduction9-3
  • § 9:2 : Terminology9-4
  • § 9:3 : Applicable Laws9-5
  • § 9:4 : Vessel Documentation9-7
    • § 9:4.1 : Eligibility and Requirements9-8
    • § 9:4.2 : “Citizen of the United States”9-9
      • [A] : Meeting and Maintaining Citizenship Standards9-9
      • [B] : Defining Citizenship for Business Entities9-10
        • [B][1] : Documentation Citizen9-10
        • [B][2] : Coastwise Trade Citizen9-11
      • [C] : Special Citizenship Considerations in Lease Financing Structures9-12
  • § 9:5 : Foreign Lessor Exemption9-13
    • § 9:5.1 : Background9-13
    • § 9:5.2 : Coast Guard and Marine Transportation Act of 20049-14
      • [A] : “Passive Investment” Requirement9-15
      • [B] : Special Exception for Tank Vessels9-16
      • [C] : Grandfathering Provision9-17
    • § 9:5.3 : Coast Guard’s Final Regulations9-17
  • § 9:6 : Cross-Border Leasing9-18
  • § 9:7 : Vessel Documentation Structures in Contrast to Aviation Documentation Structures9-19
  • § 9:8 : Recording Interests9-21
    • § 9:8.1 : Title Registry and Ownership9-21
    • § 9:8.2 : Recordable Related Instruments9-21
    • § 9:8.3 : Ship Mortgages9-22
      • [A] : Mortgagee Requirements9-22
      • [B] : Preferred Ship Mortgages9-23
        • [B][1] : Definition of “Vessel” Under Maritime Laws9-24
        • [B][2] : “Whole of the Vessel”9-24
        • [B][3] : More Than One Vessel: “Preferred Fleet Mortgages”9-25
      • [C] : Statutory Requirements9-26
    • § 9:8.4 : Vessel Documentation, Aircraft Registration, and the Uniform Commercial Code9-26
  • § 9:9 : Bareboat Charter Provisions9-27
    • § 9:9.1 : Overview9-27
    • § 9:9.2 : Hell-and-High-Water Clause9-28
    • § 9:9.3 : Operational Control9-28
    • § 9:9.4 : Maintenance9-30
      • [A] : “Seaworthy” Standard9-30
      • [B] : Classification Societies9-30
      • [C] : “In Class” Standard9-31
      • [D] : “Port State Control” Inspection9-32
    • § 9:9.5 : Maritime Liens9-32
      • [A] : Characteristics9-32
      • [B] : Types of Claims Constituting Liens9-34
        • [B][1] : Preferred Maritime Liens9-34
        • [B][2] : Outstanding Insurance Premiums9-35
        • [B][3] : Overdue Container Lease Payments9-35
        • [B][4] : Breach of Charter9-36
      • [C] : Enforcing Maritime Liens9-36
    • § 9:9.6 : General Indemnity9-37
    • § 9:9.7 : Assignment of Bareboat Charter9-38
    • § 9:9.8 : Lessor’s Sale of Residual Interest9-39
      • [A] : Lease Prohibitions on Residual Value Transfers9-39
      • [B] : Disputing the Vessel’s Return Condition to Establish Lessee Event of Default9-39
    • § 9:9.9 : Rule B Attachment9-41
  • § 9:10 : Insurance Issues9-42
    • § 9:10.1 : Overview9-42
    • § 9:10.2 : Marine Hull, Increased Value, War Risk Insurance9-44
    • § 9:10.3 : Breach-of-Warranty Coverage and Mortgagee’s Interest/Innocent Owner’s Insurance9-45
    • § 9:10.4 : Additional Perils (Pollution) Insurance9-46
    • § 9:10.5 : Pollution Liability Insurance9-46
    • § 9:10.6 : Protection and Indemnity Clubs9-47
  • § 9:11 : Lessor Oil Pollution Liability9-49
    • § 9:11.1 : The Oil Pollution Act9-49
    • § 9:11.2 : OPA 90 Amendments9-50
    • § 9:11.3 : State Law Oil Pollution Liability9-51
  • § 9:12 : Synthetic Leases9-53
    • § 9:12.1 : Characteristics and Structure9-53
    • § 9:12.2 : Ownership Issues9-53
    • § 9:12.3 : Structuring a Secured Loan9-54
    • § 9:12.4 : Lease Recharacterization Risks9-57
      • [A] : Lykes Brothers Steamship Co. Bankruptcy Case9-58
      • [B] : Considerations and Strategies in Light of Lease Recharacterization Risks9-59
  • § 9:13 : Section 11109-61
  • § 9:14 : Piracy9-63
    • § 9:14.1 : Overview9-63
    • § 9:14.2 : Legal Framework and Jurisdiction9-63
    • § 9:14.3 : Response to Increased Piracy Activity9-63
    • § 9:14.4 : Ransom and Other Piracy Costs9-64
  • § 9:15 : Vessel Recycling9-65
    • § 9:15.1 : Overview9-65
    • § 9:15.2 : U.S. Regulatory Framework9-66
    • § 9:15.3 : International Response9-66
    • § 9:15.4 : Addressing Lessor’s Liability Risks9-67
  • § 9:16 : Criminalization9-67
    • § 9:16.1 : Environmental Crimes Involving Ships9-67
    • § 9:16.2 : Protecting the Passive Vessel Lessor from Liability9-67
  • Appendix 9A : Bareboat CharterApp. 9A-1
    • Chapter 10: Real Estate Mark G. Henning ~ Winston & Strawn LLP
  • § 10:1 : Introduction10-2
  • § 10:2 : Local Law Implications10-3
  • § 10:3 : Title and Transfer Issues10-4
    • § 10:3.1 : Validity of Title Interests10-4
    • § 10:3.2 : Legal Capacity10-5
    • § 10:3.3 : Transfer Tax Considerations10-6
    • § 10:3.4 : Forms of Documents10-7
    • § 10:3.5 : Closing Mechanics10-8
    • § 10:3.6 : Recharacterization10-8
  • § 10:4 : Title Insurance10-10
    • § 10:4.1 : In General10-10
    • § 10:4.2 : Special Coverages10-12
      • [A] : Creditor’s Rights Endorsement10-12
      • [B] : Recharacterization Endorsement10-13
      • [C] : Tie-In Endorsement10-13
  • § 10:5 : Other Special Considerations10-14
    • § 10:5.1 : Documentation Matters10-14
      • [A] : Casualty/Condemnation10-15
        • [A][1] : Conventional Lease10-15
        • [A][2] : Leveraged Lease10-15
      • [B] : Lessor’s Remedies for Lease Defaults10-16
        • [B][1] : Conventional Lease10-16
        • [B][2] : Leveraged Lease10-17
      • [C] : Assignment/Subletting10-18
      • [D] : Insurance10-19
      • [E] : Alterations10-19
        • [E][1] : Conventional Lease10-19
        • [E][2] : Leveraged Lease10-20
      • [F] : Use and Return of Property10-21
      • [G] : Purchase Options; Rights of First Offer/Refusal; Burdensome Buyout10-21
      • [H] : Bond Leases10-23
    • § 10:5.2 : Debt/Equity Issues10-25
      • [A] : Cure Rights10-26
      • [B] : Equity Squeeze10-26
    • § 10:5.3 : Ground Lease Issues10-26
      • [A] : Bankruptcy Code Section 502(b)(6)10-27
  • § 10:6 : Remainderman Structure10-29
  • § 10:7 : Concurrent Lease Structure10-32
  • § 10:8 : Conclusion10-35
  • Appendix 10A : Equity/Debt Local Counsel QuestionnaireApp. 10A-1
  • Appendix 10B : Opinion of Lessee’s Local Counsel in Each Jurisdiction Where a Property Is LocatedApp. 10B-1
  • Appendix 10C : Subordination, Non-Disturbance and Attornment Agreement (1997-D)App. 10C-1
  • Appendix 10D : Ground Lease Between Remainderman and Owner Trustee BankApp. 10D-1
  • Appendix 10E : Concurrent Lease Structure (Diagram)App. 10E-1
    • Chapter 11: Power Facilities Christopher C McIsaac ~ Winston & Strawn
    Floyd L Norton ~ Morgan Lewis & Bockius LLP
    Dennis Bishop ~ Morgan Lewis & Bockius LLP
    Alex M Schnell ~
  • § 11:1 : Introduction11-2
  • § 11:2 : Construction and Completion Risks11-3
    • § 11:2.1 : Operational Risks11-5
    • § 11:2.2 : Environmental Issues11-7
    • § 11:2.3 : Regulatory Issues11-9
      • [A] : Lender/Lessor11-10
      • [B] : Regulated Public Utility Lessee11-13
      • [C] : Exempt Lessee11-14
  • § 11:3 : Conclusion11-18
    • Chapter 12: Computers and Related High-Technology Equipment Richard R Gerken ~ Wingate Enterprises Consulting
  • § 12:1 : Introduction12-3
  • § 12:2 : Historical and Contextual Overview12-3
    • § 12:2.1 : Summary12-3
    • § 12:2.2 : Early Years12-4
    • § 12:2.3 : Turbulent ’70s and ’80s12-5
    • § 12:2.4 : Changing Landscape of the ’90s into the Millennium12-6
    • § 12:2.5 : Current Trends12-8
      • [A] : “Cloud Computing”12-8
      • [B] : “Green” Issues12-9
        • [B][1] : Data Center Efficiency12-9
        • [B][2] : Electronic Waste Legislation12-9
  • § 12:3 : Contemporary Industry Issues and Various Expectations of the Parties (Lessee, Lessor, Lender)12-10
    • § 12:3.1 : Introduction12-10
    • § 12:3.2 : Maintenance Issues12-11
    • § 12:3.3 : Upgrades12-12
    • § 12:3.4 : Other Lessee Options Within the Lease12-14
      • [A] : Purchase Options12-14
      • [B] : Sublease and Early Termination12-15
      • [C] : Renewal Option and Interaction with the “Evergreen” Renewal Clause12-17
      • [D] : Determination of Fair Market Value12-19
    • § 12:3.5 : Serial Number Substitution12-19
    • § 12:3.6 : Balancing Hell or High Water Clauses with Lessee’s Quiet Enjoyment12-20
    • § 12:3.7 : Warranties and Indemnities12-23
    • § 12:3.8 : Outsourcing12-24
    • § 12:3.9 : Lessor Financing Methods—Impact on Lessee’s Rights and Obligations12-25
    • § 12:3.10 : Risk of Loss12-27
    • § 12:3.11 : Mediation and Arbitration12-27
    • § 12:3.12 : Defaults and Remedies12-28
  • § 12:4 : Software Licensing, Financing and Transferability in Computer Leasing12-29
    • § 12:4.1 : Overview12-29
    • § 12:4.2 : Software Licenses and Fees12-30
    • § 12:4.3 : Software Finance Issues12-30
      • [A] : Documentation Issues12-31
      • [B] : Lessor Issues12-31
      • [C] : Lender Issues12-32
      • [D] : Current Proposals and Alternatives12-33
  • § 12:5 : Conclusion12-36
  • Appendix 12A : Comdisco, Inc. Master Lease AgreementApp. 12A-1
  • Appendix 12B : Equipment ScheduleApp. 12B-1
  • Appendix 12C : Assignment of On-Order EquipmentApp. 12C-1
  • Appendix 12D : Technology Replacement OptionApp. 12D-1
  • Appendix 12E : PC Special Terms and ConditionsApp. 12E-1
  • Appendix 12F : Voluntary Termination LanguageApp. 12F-1
    • Chapter 13: Leveraged Leasing from a Lender’s Viewpoint Mark A Sternberg ~ Schiff Hardin LLP
    Ross D Taylor ~ Schiff Hardin LLP
  • § 13:1 : Introduction13-3
  • § 13:2 : Lender Participation in the Leveraged Lease Transaction—Structural Issues and Concerns13-5
    • § 13:2.1 : Relationship to the Other Transaction Parties13-6
      • [A] : Lessee13-6
      • [B] : Owner Participant13-13
      • [C] : Owner Trustee13-15
      • [D] : Indenture Trustee13-18
      • [E] : Collateral Agent13-20
  • § 13:3 : Structural Variations13-20
    • § 13:3.1 : Sale and Leasebacks13-20
    • § 13:3.2 : Back-Leverages13-22
    • § 13:3.3 : Pass-Through Trust Transactions13-23
  • § 13:4 : Lender Participation Issues; Obligations of the Lender13-24
    • § 13:4.1 : Lender Representations13-24
      • [A] : Investment Intent13-25
      • [B] : Source of Funds13-26
    • § 13:4.2 : Lender Covenants13-29
    • § 13:4.3 : Funding the Lender Commitment13-30
    • § 13:4.4 : Due Diligence of the Lender13-31
  • § 13:5 : Securing the Lender’s Loan: Creation, Perfection and Protection of the Lien of the Indenture13-33
    • § 13:5.1 : Obligations Secured13-33
    • § 13:5.2 : Collateral13-34
    • § 13:5.3 : Other Liens/Subsequent Liens13-35
    • § 13:5.4 : Security Documents and Lien Perfection13-37
    • § 13:5.5 : Other Matters Relating to Perfection13-40
    • § 13:5.6 : Release of Liens13-41
  • § 13:6 : Specific Lender Issues with the Lessee13-42
    • § 13:6.1 : Maintenance and Use13-42
    • § 13:6.2 : Reports and Inspection Rights13-43
    • § 13:6.3 : Insurance13-45
    • § 13:6.4 : Assignment and Subleasing13-46
    • § 13:6.5 : Mergers and Consolidations13-47
    • § 13:6.6 : Expenses and Indemnities13-48
    • § 13:6.7 : Lease Defaults and Remedies13-52
  • § 13:7 : Specific Lender Issues with the Owner Participant/Owner Trustee13-54
    • § 13:7.1 : Indenture Events of Default and Remedies13-55
    • § 13:7.2 : Debt-Equity Issues13-56
      • [A] : Cure Rights13-58
      • [B] : Squeeze Protection13-59
      • [C] : Option to Purchase Secured Loan Certificates13-60
      • [D] : Withholding of Equity Payments13-61
      • [E] : Amendments and Waivers13-61
    • § 13:7.3 : Negotiating Debt-Equity Issues13-63
  • § 13:8 : Cross-Border Transactions13-64
  • § 13:9 : Conclusion13-65
  • Appendix 13A : Sample Net Lease ProvisionApp. 13A-1
  • Appendix 13B : Sample Rent Coverage ProvisionApp. 13B-1
  • Appendix 13C : Sample Make Whole Amount DefinitionApp. 13C-1
  • Appendix 13D : Sample 4(2) Investment RepresentationApp. 13D-1
  • Appendix 13E : Sample Source of Funds RepresentationApp. 13E-1
  • Appendix 13F : Sample Granting Clause for an IndentureApp. 13F-1
  • Appendix 13G : Sample Permitted Liens DefinitionApp. 13G-1
  • Appendix 13H : Sample Chattel Paper ProvisionApp. 13H-1
  • Appendix 13I : Sample Waiver of Defenses ProvisionApp. 13I-1
  • Appendix 13J : Sample Debt-Equity ProvisionsApp. 13J-1
  • Appendix 13K : Sample USA PATRIOT Act ProvisionApp. 13K-1
    • Chapter 14: Securitization of Equipment and Auto Leases Stuart M. Litwin ~ Mayer Brown LLP
    William Levy ~
  • § 14:1 : Introduction14-4
  • § 14:2 : Securitization Basics14-5
    • § 14:2.1 : Motivations of the Originator14-5
      • [A] : Accounting Treatment14-5
      • [B] : Obtaining a Lower Cost of Funds14-6
      • [C] : Regulatory Capital Relief14-6
      • [D] : Obtaining Alternative Investor Bases14-7
      • [E] : Source of Funds During Periods of Financial Stress14-8
      • [F] : Other Motivations14-8
    • § 14:2.2 : Isolation of Financial Assets14-8
      • [A] : Removing the Assets from the Seller’s Bankruptcy Estate14-8
      • [B] : Perfecting the Transfer of the Assets14-11
      • [C] : The Transferee14-11
    • § 14:2.3 : Credit, Liquidity and Residual Value Enhancement14-12
      • [A] : General14-12
      • [B] : Credit Enhancement14-12
      • [C] : Liquidity Enhancement14-14
      • [D] : Residual Value Protection14-15
    • § 14:2.4 : Collection and Administration of the Assets14-16
    • § 14:2.5 : The Typical “Two-tier” Structure14-16
    • § 14:2.6 : Designing the Security to Be Offered to Investors14-17
    • § 14:2.7 : The Need to Have a Security Rated14-18
  • § 14:3 : Lease Securitizations14-18
    • § 14:3.1 : General14-18
    • § 14:3.2 : Residual Values14-19
    • § 14:3.3 : Incentive Programs14-19
    • § 14:3.4 : Accounting Issues14-21
      • [A] : Desirability of Off-Balance-Sheet Transactions14-21
      • [B] : SFAS 14014-22
      • [C] : Qualifying Special Purpose Entities14-24
      • [D] : Sale-Leaseback Structures14-25
      • [E] : FASB Interpretation No. 46(R)14-26
        • [E][1] : Variable Interest Entities14-26
        • [E][2] : Determining the Primary Beneficiary14-27
      • [F] : Alternatives for an Off-Balance-Sheet Result14-27
    • § 14:3.5 : Lessor Obligations14-29
    • § 14:3.6 : Securitizing Master Leases14-30
    • § 14:3.7 : Perfection Issues14-30
    • § 14:3.8 : State Sales Taxes14-31
    • § 14:3.9 : Vicarious Tort Liability14-32
    • § 14:3.10 : ERISA Issues14-33
    • § 14:3.11 : Investment Company Act14-34
    • § 14:3.12 : Securities Laws14-35
      • [A] : Types of Asset-Backed Offerings14-35
        • [A][1] : Rule 144A Offerings14-35
        • [A][2] : Private Placements14-38
        • [A][3] : Asset-Backed Commercial Paper Conduits14-38
      • [B] : Public Offerings Under Regulation AB14-39
        • [B][1] : Exemption or Registration14-39
        • [B][2] : Regulation AB Generally14-41
        • [B][3] : Shelf Registration and Definition of “Asset-Backed Security”14-41
          • [B][3][a] : Revolving and Prefunded Transactions14-44
          • [B][3][b] : Delinquent and Nonperforming Assets14-45
          • [B][3][c] : Effect of Failure to Timely File 1934 Act Reports14-45
          • [B][3][d] : Expiration of Registration Statement14-46
        • [B][4] : Static Pools14-46
        • [B][5] : Credit Scores14-48
        • [B][6] : Credit Enhancers and Swap Counterparties14-49
        • [B][7] : Servicer Disclosure14-52
        • [B][8] : Sources of Pool Cash Flow and Residual Value Information14-54
        • [B][9] : Rule 15914-56
        • [B][10] : Subsequent Reporting14-58
          • [B][10][a] : Form 10-D14-58
          • [B][10][b] : Form 10-K14-60
          • [B][10][c] : Form 8-K14-63
          • [B][10][d] : Suspension of Reporting Requirements; Form 1514-64
        • [B][11] : Third-Party Information14-64
    • § 14:3.13 : Securitizing Internet-Originated Leases14-65
    • § 14:3.14 : Reletting Leased Property14-66
    • § 14:3.15 : Tax Issues14-66
    • § 14:3.16 : Texas Margin Tax14-72
  • § 14:4 : Special Issues in Securitizing Auto Leases14-74
    • § 14:4.1 : The Retitling Problem14-74
    • § 14:4.2 : Titling Trusts14-74
    • § 14:4.3 : Setting Up a Titling Trust14-76
    • § 14:4.4 : Licensing14-77
    • § 14:4.5 : Criminal Statutes; Retitling14-78
    • § 14:4.6 : Perfection Issues14-79
    • § 14:4.7 : Securitizing TRAC Leases14-79
  • § 14:5 : Transferring Tax Benefits: Leveraged Lease Financing of Leased Autos and Trucks14-79
    • § 14:5.1 : Portfolio Sale14-80
    • § 14:5.2 : Single-Investor Sale-Leaseback14-81
    • § 14:5.3 : Like-Kind Exchanges14-81
      • [A] : Use of LKEs in Sale-Leaseback Transactions14-82
      • [B] : Like-Kind Exchange Programs and Lease Securitizations14-83
    • § 14:5.4 : Bankruptcy Risks in Sale-Leaseback Structures14-84
    • § 14:5.5 : Single-Investor TRAC Lease Transactions14-85
    • § 14:5.6 : Leveraged Lease Structures14-86
    • § 14:5.7 : Asset-Backed Leveraged Leases14-87
    • § 14:5.8 : Cross-Border “Double-Dip” Structures14-89
  • § 14:6 : Securitization of Residual Value Risk14-90
  • § 14:7 : Rental Car Securitization14-92
  • Appendix 14A : Item 1122(d) Servicing CriteriaApp. 14A-1
  • Appendix 14B : Form of Sarbanes-Oxley CertificationApp. 14B-1
    • Chapter 15: Synthetic Leasing Arnold G Gough ~ Winston & Strawn LLP
    W Kirk Grimm ~ McGuire Woods LLP
    Michael G Robinson ~ Buckner Alani Khouri Chavos & Mirkovich
  • § 15:1 : Introduction15-3
  • § 15:2 : Synthetic Lease Structures15-4
    • § 15:2.1 : Typical Single-Investor Synthetic Lease Transaction15-4
    • § 15:2.2 : Typical Leveraged Synthetic Lease Transaction15-5
  • § 15:3 : Accounting and Tax Treatment15-6
    • § 15:3.1 : Accounting Treatment15-6
      • [A] : Single-Investor Transaction15-7
      • [B] : Leveraged Synthetic Leases15-8
      • [C] : Real Estate and Other Sale-Leasebacks15-8
      • [D] : Other Accounting Issues15-10
        • [D][1] : Lessor Accounting15-10
        • [D][2] : Lease Term15-10
        • [D][3] : Master Leases or Multiple-Asset Leases15-11
    • § 15:3.2 : Tax Treatment15-11
      • [A] : Tax Issue15-11
      • [B] : Review of the Traditional “True Lease” Authority15-12
        • [B][1] : Potential Upside from the Leased Property—Effect of Purchase Options15-13
        • [B][2] : Potential Downside Risk with Respect to the Leased Property—Effect of Residual Value Guarantees15-14
      • [C] : Taxpayer’s Ability to Disregard the Form of a Lease15-15
      • [D] : Applying the True Lease Authority to Synthetic Lease Transactions15-18
      • [E] : Solutions to Tax Ownership Issue15-18
        • [E][1] : Lessee’s Assumption of the Risk15-18
        • [E][2] : Structuring Debt Amortization to Correspond to Expected Depreciation15-19
        • [E][3] : Anti-Windfall Provisions15-20
      • [F] : Additional Tax Issues in Multiple-Investor Transaction15-20
      • [G] : State Tax Issues15-21
        • [G][1] : Sales, Use, and Transfer Taxes15-21
        • [G][2] : Income Taxes15-21
  • § 15:4 : Synthetic Lease Documentation15-21
    • § 15:4.1 : Leasing Company Subsidiary Structures15-21
    • § 15:4.2 : Direct Ownership Structures15-23
    • § 15:4.3 : Documentation15-23
      • [A] : Real Estate with a Bank Leasing Company Subsidiary As Lessor15-23
      • [B] : Real Estate Without a Leasing Company As Lessor15-28
      • [C] : Equipment Leases15-29
      • [D] : Special Topics: Additional Collateral and Cash Collateral15-29
        • [D][1] : Additional Collateral15-29
        • [D][2] : Cash Collateral15-30
  • § 15:5 : Commercial Law Aspects of Synthetic Leasing15-30
    • § 15:5.1 : Recharacterization15-30
      • [A] : Goods15-31
        • [A][1] : Article 2A Versus Article 915-31
        • [A][2] : Perfection15-36
        • [A][3] : Cancellation15-37
        • [A][4] : Implied Warranties15-38
        • [A][5] : Remedies15-38
      • [B] : Real Estate15-40
    • § 15:5.2 : Bankruptcy15-41
    • § 15:5.3 : Synthetic Lease Considerations for Commercial Lenders15-42
  • Appendix 15A : Provision for the Remarketing and Sale of the Property in a Real Estate Synthetic LeaseApp. 15A-1
    • Chapter 16: Leasing Outside the United States: Pickle, Loss Trapping, Subpart F, and Foreign Tax Credits Glenn Pfeiffer ~ GE
    Greer Schneider ~
    Suzanne Pepe ~
    David Burton ~ Akin Gump Strauss Hauer & Feld LLP
    Eli M Katz ~ Chadbourne & Parke LLP
    Daniel Kiely ~ GE Capital
  • § 16:1 : Introduction16-4
  • § 16:2 : Depreciation of Leased Property Used Outside the United States16-11
    • § 16:2.1 : The First Reform of Depreciation for Leased Property Used Outside the United States16-11
    • § 16:2.2 : Property Leased to U.S. Taxpayer but Used Outside the United States16-11
      • [A] : Containers16-12
      • [B] : Satellites16-12
      • [C] : Vessels16-13
      • [D] : Aircraft16-13
    • § 16:2.3 : Depreciation of Property Leased to Non-U.S. Taxpayers Prior to the Jobs Act16-13
    • § 16:2.4 : The Pickle Rule and Its Shortcomings16-14
      • [A] : Replacement Lease and Lease-to-Service Contract Structures16-16
      • [B] : QTE Structures16-18
      • [C] : Defeasance Structures16-18
  • § 16:3 : Tax-Exempt Leasing After the Jobs Act16-20
    • § 16:3.1 : Congress’s Response to the Tax-Exempt Leasing Problem—An Old Solution Revived16-20
    • § 16:3.2 : Directly Targeting the Problem Transactions—Refining the Pickle Rule16-21
    • § 16:3.3 : Casting a Wide Net: Section 470 and Tax-Exempt Use Losses16-22
    • § 16:3.4 : Exceptions to Section 47016-24
    • § 16:3.5 : Lessee Cannot Monetize Its Obligations16-25
    • § 16:3.6 : Lessor Makes and Maintains a Substantial Equity Investment16-26
    • § 16:3.7 : Lessee May Not Bear More Than Minimal Risk of Loss16-27
    • § 16:3.8 : Leases with Fixed-Price Purchase Options16-27
  • § 16:4 : General Explanation of Foreign Tax Credits and Relevance of Foreign-Source Tax Attributes16-28
  • § 16:5 : Sourcing of Rents and Depreciation16-29
    • § 16:5.1 : General Rule16-29
    • § 16:5.2 : Aircraft16-29
    • § 16:5.3 : Rolling Stock16-31
    • § 16:5.4 : Satellites16-33
  • § 16:6 : Sourcing of Interest Expense16-34
    • § 16:6.1 : Non-Qualified Nonrecourse Indebtedness16-35
      • [A] : Book Value Method16-37
      • [B] : FMV Method16-38
      • [C] : CFCs16-39
      • [D] : Section 467 Interest16-41
    • § 16:6.2 : Qualified Nonrecourse Indebtedness16-43
      • [A] : Specifically Incurred to Acquire Property16-44
      • [B] : Actual Application16-44
      • [C] : Nonrecourse16-45
      • [D] : Sufficiency of Cash Flow16-48
      • [E] : Restrictions in Loan Documents16-48
      • [F] : Refinancings16-48
  • § 16:7 : Leasing to Non-U.S. Persons by a Foreign Affiliate of a U.S. Taxpayer16-49
    • § 16:7.1 : Base Case—Subpart F Income16-49
    • § 16:7.2 : Active Rental Exception (ARE)16-54
      • [A] : Marketing Requirement16-55
        • [A][1] : Terminal Rental Adjustment Clause (TRAC) Qualified Motor Vehicle Lease16-59
      • [B] : Substantial Foreign Organization16-60
      • [C] : Activities Must Occur Outside the United States16-62
    • § 16:7.3 : Active Financing Exception16-62
      • [A] : Introduction16-62
      • [B] : History of Section 954(h)16-63
      • [C] : Eligible CFC Under Section 954(h)(2)16-64
        • [C][1] : Substantial Activity16-64
        • [C][2] : Predominantly Engaged—The 70% Test16-66
      • [D] : Qualified Banking or Financing Income Under Section 954(h)(3)16-68
      • [E] : Interaction of Sections 954(h)(2) and 954(h)(3)16-70
      • [F] : Application on an Annual Accounting Period16-71
      • [G] : Anti-Abuse Rule16-71
      • [H] : Issues Raised in Application16-72
    • § 16:7.4 : Aircraft, Vessel and Engine Rental Exception16-76
      • [A] : True Lease for U.S. Tax Purposes, Operating or Direct Finance Lease for U.S. GAAP16-77
        • [A][1] : No Requirement to Market the Metal16-78
        • [A][2] : Place of Manufacture Is Irrelevant16-78
      • [B] : Must Be Used in Foreign Commerce16-78
        • [B][1] : Application to Corporate Aircraft16-79
      • [C] : Lessor Must Be a Controlled Foreign Corporation16-79
      • [D] : No Home-Country Requirement So Long As Outside the United States16-80
      • [E] : Disregarded Entity As a Local Employer16-80
      • [F] : Mid-Lease Acquisition Is Acceptable16-81
      • [G] : Ten Percent Expense Safe Harbor16-81
      • [H] : Business Purpose to Move Existing FSC/ETI Aircraft or Vessels Off-Shore16-81
        • [H][1] : Business Purpose to Move Non-FSC/ETI Aircraft and Vessels16-82
    • Chapter 17: Foreign Law Issues in U.S. Cross-Border Leases Ferdinand A Calice ~ Hunton & Williams LLP
    J Andrew Murphy ~ NRG Energy Inc
  • § 17:1 : Introduction17-2
  • § 17:2 : Governing Law17-3
    • § 17:2.1 : Choice of U.S. Law17-3
    • § 17:2.2 : Choice of Foreign Law17-3
      • [A] : Real Property17-4
      • [B] : Equipment17-6
      • [C] : Other Issues17-6
  • § 17:3 : Establishing and Protecting Ownership, Leasehold, and Security Interests17-7
    • § 17:3.1 : Ownership Interests17-7
    • § 17:3.2 : Leasehold Interests17-8
    • § 17:3.3 : Security Interests17-8
  • § 17:4 : Limitations on Remedies17-9
    • § 17:4.1 : Typical Lease Remedies17-9
    • § 17:4.2 : Enforcement of Remedies17-10
  • § 17:5 : Enforcement of Judgments of U.S. Courts in Foreign Jurisdictions17-10
    • § 17:5.1 : Reciprocity17-11
    • § 17:5.2 : Other Factors17-11
  • § 17:6 : Bankruptcy Issues17-13
    • § 17:6.1 : Basic Approaches17-14
    • § 17:6.2 : Chapter 15 of the U.S. Bankruptcy Code17-14
  • § 17:7 : Rejection, Termination, and Modification of Contracts17-15
    • § 17:7.1 : Rejection in Bankruptcy17-15
    • § 17:7.2 : Other Grounds for Termination17-15
  • § 17:8 : Local Counsel17-16
  • Appendix 17A : Form of Foreign Local Law QuestionnaireApp. 17A-1
    • Chapter 18: Municipal Leases Stephen A Edwards ~ Morgan Lewis & Bockius LLP
    Joseph Krolikowski ~ McKenna Long & Aldridge LLP
  • § 18:1 : Introduction18-3
  • § 18:2 : Structure of Municipal Leases18-3
    • § 18:2.1 : Tax-Exempt Obligations18-4
    • § 18:2.2 : The American Recovery and Reinvestment Act of 200918-5
    • § 18:2.3 : General Characteristics of a Municipal Lease18-6
    • § 18:2.4 : Certificates of Participation18-7
  • § 18:3 : Who Is the Lessee?18-8
    • § 18:3.1 : State Law18-8
    • § 18:3.2 : Income Tax Definition18-9
  • § 18:4 : Is the Lease Valid?18-14
    • § 18:4.1 : State Supremacy and Dillon’s Rule18-15
    • § 18:4.2 : Power to Enter Into the Lease18-18
    • § 18:4.3 : Debt Limitations18-19
      • [A] : Annual Appropriation Leases18-20
      • [B] : Abatement Leases18-23
      • [C] : Special Fund Leases18-24
      • [D] : Summary18-24
    • § 18:4.4 : Voter Approval18-25
    • § 18:4.5 : Usury18-26
    • § 18:4.6 : Public Bidding, Prime Bidding, Limitation on Out-of-State Purchases, Prevailing Wages, Davis-Bacon, Etc.18-26
    • § 18:4.7 : Other State Law Requirements18-27
  • § 18:5 : Security Interests and Default Remedies18-27
  • § 18:6 : Federal and State Tax Issues18-30
    • § 18:6.1 : Validity Under State Law18-30
    • § 18:6.2 : Exercise of Borrowing Power18-30
    • § 18:6.3 : Conditional Sale Contract Characterization18-32
    • § 18:6.4 : Private Activity Bond Status18-33
    • § 18:6.5 : Arbitrage18-36
    • § 18:6.6 : Forms 8038, 8038-G, and 8038-GC18-38
    • § 18:6.7 : Other Federal Tax Requirements18-39
    • § 18:6.8 : State Tax Issues18-39
  • § 18:7 : Securities Laws18-39
    • § 18:7.1 : Registration of the Offering18-40
    • § 18:7.2 : Anti-Fraud Provisions18-41
    • § 18:7.3 : Procedural Requirements for Disclosure18-41
    • § 18:7.4 : Status As an Investment Company18-43
    • § 18:7.5 : Blue Sky Law Concerns18-44
  • § 18:8 : Conclusion18-44
  • Appendix 18A : Private Letter Ruling 88-43-058App. 18A-1
    • Chapter 19: Role of the Trustee Tara J Hoffner ~ Richards Layton & Finger PA
  • § 19:1 : Nature of the Trust19-2
    • § 19:1.1 : Background of Fiduciary Relations19-2
    • § 19:1.2 : The Rise of the Statutory Trust19-3
  • § 19:2 : Reasons to Use a Trustee19-5
    • § 19:2.1 : Owner Trustee Versus Indenture Trustee19-5
    • § 19:2.2 : Limited Liability19-6
    • § 19:2.3 : Custody and Title of Assets19-7
    • § 19:2.4 : Bankruptcy Concerns19-8
  • § 19:3 : Selection of the Trustee19-11
  • § 19:4 : Duties of the Trustee19-13
    • § 19:4.1 : Fiduciary Duties19-13
      • [A] : Duties of Care, Loyalty, and Candor19-13
      • [B] : Statutory Standards of Care19-14
    • § 19:4.2 : Administrative Duties19-16
  • § 19:5 : Liabilities of the Trustee to Others19-18
    • § 19:5.1 : Contractual Liability19-18
    • § 19:5.2 : Tort Liability19-19
    • § 19:5.3 : Environmental Liability19-20
    • § 19:5.4 : ERISA19-21
    • § 19:5.5 : Federal Statutory Limits on Liability19-22
  • § 19:6 : Rights of the Trustee19-23
    • § 19:6.1 : Compensation and Indemnification19-23
    • § 19:6.2 : Insurance19-25
    • § 19:6.3 : Instructions from Investors19-25
    • § 19:6.4 : Consultation with Experts19-25
    • § 19:6.5 : Merger, Consolidation, Resignation, and Removal19-26
  • § 19:7 : Doing-Business Issues19-26
    • Chapter 20: Middle-Market Leasing and Syndication Edward K Gross ~ Ober Kaler Grimes & Shriver
  • § 20:1 : Introduction20-4
    • § 20:1.1 : Generally20-4
    • § 20:1.2 : Leasing20-5
    • § 20:1.3 : Syndications20-5
    • § 20:1.4 : Chapter Coverage20-6
  • § 20:2 : Middle-Market Lease Transactions20-6
    • § 20:2.1 : Types of Middle-Market Lease Transactions20-6
      • [A] : Structures (Motivations and Characteristics)20-6
        • [A][1] : Tax/True Leases20-7
          • [A][1][a] : Generally20-7
          • [A][1][b] : “First Amendment” Leases20-9
          • [A][1][c] : Terminal Rental Adjustment Clause (TRAC) Leases20-10
        • [A][2] : Conditional Sale/Non-True Leases20-13
          • [A][2][a] : Generally20-13
          • [A][2][b] : “Puts” and Bargain Renewal and Purchase Options20-15
          • [A][2][c] : Amortizing Rent Payments20-15
          • [A][2][d] : TRAC Leases and Synthetic Leases20-15
        • [A][3] : Accounting Motivated Structures (Off-Balance-Sheet Financings/Synthetic Leases)20-16
      • [B] : Deal Size and Equipment Types20-18
      • [C] : Vendor Programs/Participation20-22
      • [D] : Direct Purchase Versus Sale and Leaseback20-24
      • [E] : Credit Support20-25
    • § 20:2.2 : Deal Participants20-26
      • [A] : Lessees—Deal Motivations and Risks (What Lessees Want/Need)20-27
      • [B] : Lessors—Deal Motivations and Risks (What Lessors Want/Need)20-27
      • [C] : Others—Deal Motivations and Risks (What Others Want/Need)20-28
        • [C][1] : Trustees20-28
        • [C][2] : Portfolio Administrators20-28
        • [C][3] : Syndication Parties/Fiduciaries20-29
        • [C][4] : Lessee’s and Lessor’s Line Lenders, Creditors, Etc.20-30
        • [C][5] : Vendors20-31
        • [C][6] : Lessee Representatives and Brokers20-32
        • [C][7] : Third-Party Credit Support Providers20-33
        • [C][8] : Sublessee and (Lessee) Assignees20-33
    • § 20:2.3 : Lease Documentation Issues20-34
      • [A] : Generally20-34
      • [B] : Specific Lease Provisions for Syndicating Lessor or an Investor (an Acquiring Lessor)20-37
        • [B][1] : Master Lease Agreement and Stand-Alone Equipment Schedules20-37
        • [B][2] : Term of the Master Lease and Each Equipment Schedule20-38
        • [B][3] : Rent20-39
        • [B][4] : Representations, Warranties, and Covenants20-41
        • [B][5] : Conditions Precedent to Lessor’s Obligations20-42
        • [B][6] : Delivery, Inspection, and Acceptance of the Equipment20-44
        • [B][7] : Use of the Equipment20-46
        • [B][8] : Maintenance of the Equipment20-47
        • [B][9] : Warranties20-50
        • [B][10] : Fees and Taxes20-52
        • [B][11] : Preserving the Equipment Free from All Liens or Encumbrances20-52
        • [B][12] : Insurance20-53
        • [B][13] : Loss and Damage20-54
        • [B][14] : Redelivery20-55
        • [B][15] : Indemnity20-56
        • [B][16] : Default20-57
        • [B][17] : Remedies20-59
        • [B][18] : Assignment and Subletting20-66
          • [B][18][a] : By Lessee20-66
          • [B][18][b] : By Lessor20-67
        • [B][19] : Income Tax Indemnification20-70
          • [B][19][a] : Scope of Indemnification20-70
        • [B][20] : Grant of Security Interest20-74
        • [B][21] : Miscellaneous Lease Provisions20-74
          • [B][21][a] : Quiet Enjoyment Clause20-75
      • [C] : Acquisition of Equipment20-75
  • § 20:3 : Syndication Transactions20-77
    • § 20:3.1 : Generally20-77
      • [A] : Certain Syndication Issues20-78
        • [A][1] : True Sales Versus Financings20-78
        • [A][2] : Recourse20-86
        • [A][3] : Applicability of Bulk Sales Acts, Fraudulent Conveyances, and Hart-Scott-Rodino Act to Sales of Lease Portfolios20-89
          • [A][3][a] : Bulk Sales Acts20-89
          • [A][3][b] : Fraudulent Conveyances20-90
          • [A][3][c] : Hart-Scott-Rodino Antitrust Improvements Act of 197620-91
        • [A][4] : Fiscal Agents (With or Without Notification)and Other Fiduciaries20-92
        • [A][5] : Securities Issues20-94
        • [A][6] : Fraud Avoidance20-95
      • [B] : Specific Structures20-98
        • [B][1] : Discounting or Leveraging20-99
        • [B][2] : Sale and Assignments (“True Sales”)20-102
        • [B][3] : Participations20-104
    • § 20:3.2 : Deal Participants20-106
      • [A] : Originators and Other Assignors20-106
      • [B] : Assignees’ Lenders and Participants20-107
    • § 20:3.3 : Syndication Document Issues20-107
      • [A] : Representations and Warranties20-107
      • [B] : “Security” Acknowledgments20-110
      • [C] : Delivery of Documents and Other Conditions Precedent20-111
      • [D] : Scope of Any Fiscal Agency20-113
      • [E] : Remarketing Agreements20-115
  • Appendix 20A : Master Lease AgreementApp. 20A-1
  • Appendix 20B : First Amendment RiderApp. 20B-1
  • Appendix 20C : FMV RiderApp.20C-1
  • Appendix 20D : Tax Contest RiderApp. 20D-1
  • Appendix 20E : Co-Lease RiderApp. 20E-1
  • Appendix 20F : Security Deposit RiderApp. 20F-1
  • Appendix 20G : Environmental RiderApp. 20G-1
  • Appendix 20H : TRAC RiderApp. 20H-1
  • Appendix 20I : Lease for Security Conversion Letter AmendmentApp. 20I-1
  • Appendix 20J : Equipment ScheduleApp. 20J-1
  • Appendix 20K : Schedule of EquipmentApp. 20K-1
  • Appendix 20L : Corporate Certificate of ResolutionsApp. 20L-1
  • Appendix 20M : Real Property WaiverApp. 20M-1
  • Appendix 20N : Attachment to Form UCC-1App. 20N-1
  • Appendix 20O : Master Lease Agreement—Synthetic LeaseApp. 20O-1
  • Appendix 20P : Master Assignment AgreementApp. 20P-1
  • Appendix 20Q : Participation AgreementApp. 20Q-1
  • Appendix 20R : Loan and Security Agreement Discounting FormApp. 20R-1
  • Appendix 20S : Agency AgreementApp. 20S-1
  • Appendix 20T : Equipment Purchase Order Assignment and NovationApp. 20T-1
    • Chapter 21: Bankruptcy Issues Robert E Clark ~ Friedman Dumas & Springwater LLP
    Cecily A. Dumas ~ Dumas & Clark LLP
  • § 21:1 : Overview21-3
    • § 21:1.1 : Summary of Bankruptcy Code Section 36521-4
    • § 21:1.2 : Definition of Unexpired Lease or Executory Contract21-6
  • § 21:2 : Rights of the Debtor and Interests of the Estate21-10
    • § 21:2.1 : The Automatic Stay21-10
    • § 21:2.2 : Recharacterizing the Lease As a Security Interest21-12
    • § 21:2.3 : Prepetition Termination of Lease21-17
      • [A] : Extension of Time to Cure Defaults21-19
      • [B] : Documenting Termination in Workouts21-22
  • § 21:3 : Debtor’s Obligations Pending Assumption or Rejection of Lease21-24
    • § 21:3.1 : Mutuality Temporarily Suspended21-24
    • § 21:3.2 : Contract Performance Required Sixty Days After Case Is Filed21-25
    • § 21:3.3 : Adequate Protection and Payment of Administrative Rent21-30
    • § 21:3.4 : Creditors’ Right to Elect a Chapter 11 Trustee21-32
  • § 21:4 : Procedure for Assuming or Rejecting a Lease21-32
    • § 21:4.1 : Time Restrictions21-33
    • § 21:4.2 : Assumption or Rejection in a Plan; The Ride-Through Option21-35
      • [A] : Notice to Lessor21-38
      • [B] : Assumption or Rejection After Plan Is Confirmed21-40
      • [C] : Objection to Confirmation and Voting21-41
      • [D] : Remedies After Plan Confirmation21-42
    • § 21:4.3 : No Implied Assumption or Rejection21-44
  • § 21:5 : Assumption of Lease21-45
    • § 21:5.1 : Lease Must Be Assumed in Its Entirety;Disaggregation21-45
    • § 21:5.2 : Business Judgment Standard21-47
    • § 21:5.3 : Cure, Compensation, and Adequate Assurance of Future Performance21-47
    • § 21:5.4 : Cure Requirements21-49
      • [A] : Adequate Assurance of Future Performance21-51
    • § 21:5.5 : Effect of Lease Assumption; Later Rejection by Trustee21-53
  • § 21:6 : Assignment of Lease21-55
    • § 21:6.1 : Requirements for Assignment21-56
    • § 21:6.2 : Restrictions on Assumption and Assignment21-60
      • [A] : Non-Delegable Contracts21-61
      • [B] : Assumption of Non-Delegable Contracts Versus Assignment to Third Party21-62
      • [C] : Contracts for Loans or Financial Accommodations21-65
  • § 21:7 : Rejection of Leases21-67
    • § 21:7.1 : Standard for Rejection21-67
    • § 21:7.2 : Claim for Rejection Damages21-68
    • § 21:7.3 : Rejection Is a Breach of Contract, Not Termination21-71
  • § 21:8 : Avoiding Powers of Debtor-Lessee21-72
    • § 21:8.1 : Strong-Arm Clause21-73
    • § 21:8.2 : Preferences21-73
  • § 21:9 : Claims Against the Debtor21-76
    • § 21:9.1 : Filing Proofs of Claims21-76
    • § 21:9.2 : Time for Filing Proofs of Claims21-78
  • § 21:10 : Recoupment and Setoff21-79
  • § 21:11 : Special Issues Involving Bankruptcy of the Lessor21-83
    • § 21:11.1 : Performance Before Lease Is Assumed or Rejected21-83
    • § 21:11.2 : Lessor’s Authority to Assume Lease21-84
    • § 21:11.3 : Lessor’s Power to Reject Lease21-86
  • § 21:12 : Bankruptcy Risks for the Lease Financier21-88
    • § 21:12.1 : Derivative Nature of Legal Rights and Credit Risks21-88
      • [A] : Collection of Lease Receivables21-89
      • [B] : Use of Cash Collateral21-91
      • [C] : Continuation of Security Interest21-91
    • § 21:12.2 : Documentation21-92
    • § 21:12.3 : Bankruptcy-Remote Entities21-95
    • § 21:12.4 : Remedies of Financier21-97
    • § 21:12.5 : Rights of Financier Where Lease Is Assumed or Assigned21-99
    • § 21:12.6 : Rights of Financier upon Rejection of Lease21-100
    • § 21:12.7 : Guaranties of Lease Obligation21-101
  • § 21:13 : Special Protections for Financiers of Aircraft, Ships, and Railroad Rolling Stock21-102
    • § 21:13.1 : Overview of Sections 1110 and 116821-102
    • § 21:13.2 : Limitations on Applicability21-106
    • § 21:13.3 : Effect of Sections 1110 and 1168 on Chapter 11 Operations21-107
    • § 21:13.4 : Defense to Trustee’s Avoiding Powers21-110
  • § 21:14 : 2007 Amendments to the Bankruptcy Rules21-111
    • Chapter 22: Environmental Issues Eleni S Kouimelis ~ Winston & Strawn LLP
  • § 22:1 : Introduction22-3
  • § 22:2 : Major Environmental Laws22-5
    • § 22:2.1 : Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)22-5
      • [A] : Overview22-5
      • [B] : Liability22-5
      • [C] : Defenses22-9
      • [D] : Asset Conservation, Lender Liability and Deposit Insurance Act of 199622-11
      • [E] : Small Business Liability Relief and Brownfields Revitalization Act22-16
    • § 22:2.2 : Resource Conservation and Recovery Act (RCRA)22-19
      • [A] : Overview22-19
      • [B] : Liability22-20
      • [C] : Hazardous Wastes22-20
        • [C][1] : Underground Storage Tanks22-22
      • [D] : RCRA Enforcement Provisions22-23
      • [E] : Defenses22-25
    • § 22:2.3 : Clean Water Act22-25
      • [A] : Overview22-25
      • [B] : Liability22-27
      • [C] : Defenses22-28
    • § 22:2.4 : Oil Pollution Act of 199022-30
      • [A] : Overview22-30
      • [B] : Liability Under the OPA22-30
      • [C] : Defenses to Liability22-32
    • § 22:2.5 : Clean Air Act22-32
      • [A] : Overview22-32
      • [B] : Regulatory Framework22-33
        • [B][1] : New Source Review22-33
          • [B][1][a] : Prevention of Significant Deterioration Permit Program22-33
          • [B][1][b] : Nonattainment NSR Program22-35
        • [B][2] : Title V Operating Permit Program22-38
        • [B][3] : Additional Programs22-40
      • [C] : Liability Under the CAA22-41
        • [C][1] : Liability Overview22-41
        • [C][2] : Civil Liability—Administrative22-41
        • [C][3] : Civil Liability—Judicial22-42
        • [C][4] : Criminal Liability22-43
        • [C][5] : Liability Under State Law22-44
      • [D] : Defenses to Liability22-44
    • § 22:2.6 : Climate Change22-44
      • [A] : Overview22-44
      • [B] : International Regulation of GHGs22-45
      • [C] : Federal Legislation22-46
      • [D] : Administrative Regulation22-46
      • [E] : Regional, State, and Local Regulation22-51
      • [F] : Leasing Transactions Affected by Climate Change Regulation22-52
    • § 22:2.7 : Renewable Energy22-54
      • [A] : Overview22-54
      • [B] : Endangered Species Act22-54
        • [B][1] : Overview22-54
        • [B][2] : Role in Renewable Energy Projects22-57
      • [C] : Permitting22-58
    • § 22:2.8 : Vapor Intrusion22-58
      • [A] : Overview22-58
      • [B] : Vapor Intrusion Liability22-59
        • [B][1] : Overview22-59
        • [B][2] : Liability of Lenders and Borrowers22-61
        • [B][3] : Reopening of Sites with NFAs22-62
      • [C] : Regulatory Framework22-63
        • [C][1] : ASTM E260022-63
        • [C][2] : State Guidelines22-65
      • [D] : Suggestions to Avoid Liability22-66
    • § 22:2.9 : State Laws22-67
    • § 22:2.10 : Hydraulic Fracturing (“Fracking”)22-69
      • [A] : The Fracking Process22-69
      • [B] : Fracking Regulation22-70
      • [C] : Fracking Litigation22-71
      • [D] : Future Outlook22-72
  • § 22:3 : Mitigating Liability in Leasing Transactions22-72
    • § 22:3.1 : Overview22-72
    • § 22:3.2 : Due Diligence22-73
      • [A] : Purpose22-73
      • [B] : Environmental Reports22-76
      • [C] : All Appropriate Inquiry22-78
      • [D] : Continuing Obligations22-79
      • [E] : Enhanced Due Diligence22-80
    • § 22:3.3 : Documenting the Transaction22-83
      • [A] : Overview22-83
      • [B] : Representations, Warranties, and Covenants22-85
        • [B][1] : Representations and Warranties22-85
        • [B][2] : Covenants22-87
      • [C] : Indemnities22-88
      • [D] : Restrictions on Use of the Property22-89
      • [E] : Notification/Right of Inspection22-89
      • [F] : Return of Property22-90
  • Appendix 22A : Sample Environmental Representations and WarrantiesApp. 22A-1
  • Appendix 22B : Sample Environmental CovenantApp. 22B-1
  • Appendix 22C : Sample Use of the Premises ProvisionApp. 22C-1
  • Appendix 22D : Sample Environmental Return of Property ProvisionsApp. 22D-1
    • Chapter 23: Legal Authority for Leasing Gordon D Alter ~ Allco Financial Corporation
    Francis Zou ~
  • § 23:1 : Introduction23-3
  • § 23:2 : National Banks23-6
    • § 23:2.1 : Summary of the Law23-6
    • § 23:2.2 : Historical Perspective23-7
      • [A] : Business of Banking Under the National Bank Act23-7
      • [B] : Early OCC Regulations23-8
      • [C] : M&M Leasing Case23-9
      • [D] : Regulatory Response to M&M Leasing23-11
      • [E] : Competitive Equality Banking Act of 1987 (CEBA)23-14
      • [F] : OCC Regulations Implementing CEBA23-15
    • § 23:2.3 : Current Legal Authority for Leasing23-18
      • [A] : General Provisions Applicable to Both Section 24 (Seventh) Leases and CEBA Leases23-18
        • [A][1] : Full Payout and Net Lease Requirements23-18
        • [A][2] : Acquisition of Property in Anticipation of Leasing23-20
        • [A][3] : Holding Period for Off-Lease Assets23-21
        • [A][4] : Separate Records23-22
        • [A][5] : Lending Limits/Transactions with Affiliates23-22
      • [B] : Provisions Applicable Only to CEBA Leases23-23
      • [C] : Provisions Applicable Only to Section 24 (Seventh) Leases23-23
      • [D] : OCC Interpretations23-25
        • [D][1] : Ground Leases23-25
        • [D][2] : Agent Activities23-27
        • [D][3] : Grantor Trusts23-28
        • [D][4] : Subleasing23-28
        • [D][5] : Residual Purchase Agreements23-29
      • [E] : Bank Service Companies and Other Operating Subsidiaries of National Banks23-29
  • § 23:3 : Bank Holding Companies23-31
    • § 23:3.1 : Summary of the Law23-31
    • § 23:3.2 : Historical Perspective23-33
      • [A] : Bank Holding Company Act of 195623-33
      • [B] : Board Regulations Determining Activities Closely Related to Banking23-35
    • § 23:3.3 : Current Legal Authority for Leasing23-39
      • [A] : Leasing As a Permissible Nonbanking Activity23-42
      • [B] : Procedural Requirements23-44
      • [C] : Board Interpretations23-46
        • [C][1] : Remarketing23-46
        • [C][2] : Private Placement of Debt and Equity Interests in Leased Equipment23-47
  • § 23:4 : Federal Savings Associations and Federal Savings Banks23-47
    • § 23:4.1 : Summary of the Law23-47
    • § 23:4.2 : Historical Perspective23-49
      • [A] : Development of Leasing Under the Home Owners’ Loan Act23-49
      • [B] : Garn-St Germain Depository Institutions Act of 198223-51
    • § 23:4.3 : Current Legal Authority for Leasing23-52
      • [A] : Federal Savings Associations and Federal Savings Banks23-53
      • [B] : Operating Subsidiaries and Service Corporations23-54
      • [C] : Savings and Loan Holding Companies23-55
  • § 23:5 : State Banks and Savings Associations23-57
    • § 23:5.1 : Summary of the Law23-57
    • § 23:5.2 : State Authority for Leasing Activities of State Banks23-58
    • § 23:5.3 : Federal Regulation of State Banks23-59
      • [A] : State Member Banks23-59
      • [B] : State Nonmember Banks23-60
    • § 23:5.4 : State Authority for Leasing Activities of State Savings Associations23-63
    • § 23:5.5 : Federal Regulation of State Savings Associations23-64
  • § 23:6 : Insurance Companies23-65
    • § 23:6.1 : Summary of the Law23-65
    • § 23:6.2 : Introduction23-66
    • § 23:6.3 : Legal Investment Laws for New York Insurance Companies23-66
      • [A] : Leasing Authority of New York Life Insurance Companies23-67
      • [B] : Leasing Authority of New York Property and Casualty Insurance Companies23-69
      • [C] : Applicability of the New York Investment Laws to Non-New York Insurers23-71
    • § 23:6.4 : Legal Investment Laws for Texas Insurance Companies23-72
    • § 23:6.5 : Legal Investment Laws for Illinois Insurance Companies23-73
    • Chapter 24: Securities Laws Issues Ian Shrank ~
    Howard A Kenny ~ Morgan Lewis & Bockius LLP
  • § 24:1 : Introduction24-2
  • § 24:2 : Securities Act of 193324-3
    • § 24:2.1 : Is the Lessor’s Investment a Security?24-3
      • [A] : Commonality24-4
      • [B] : Profits24-6
      • [C] : Efforts of Others24-6
    • § 24:2.2 : Is Leveraged Lease Debt a Security?24-10
      • [A] : Reves Test24-10
      • [B] : Four Factors24-11
    • § 24:2.3 : Registration Exemptions24-15
      • [A] : Private Placement Exemption24-15
      • [B] : Regulation D24-18
      • [C] : Rule 144A24-18
    • § 24:2.4 : Blue Sky Laws24-19
  • § 24:3 : 1934 Act24-20
  • § 24:4 : Trust Indenture Act24-22
  • § 24:5 : Investment Company Act24-24
  • § 24:6 : Debt Offerings24-27
    • § 24:6.1 : General24-27
    • § 24:6.2 : Changes to Lease Documents24-32
      • [A] : Changes to Existing Documents24-33
      • [B] : Placement Agreement24-36
      • [C] : Pass-Through Trust Agreement24-37
    • § 24:6.3 : Required Disclosures24-38
      • [A] : Summary of Documents24-38
      • [B] : Plan of Distribution and Role of DTC24-39
      • [C] : Risk Factors24-39
        • [C][1] : Bankruptcy24-40
        • [C][2] : Environmental Risks24-40
        • [C][3] : Restrictions on Trading24-40
        • [C][4] : Tax Issues24-40
    • § 24:6.4 : Role of DTC and Rating Agencies24-43
      • [A] : DTC24-43
      • [B] : Rating Agencies24-44
    • Chapter 25: Insurance Issues Richard P. Lewis ~ Reed Smith LLP
    Jill N Averett ~ Reed Smith LLP
  • § 25:1 : Introduction25-3
  • § 25:2 : The Difference Between Insurance and Contractual Indemnity25-3
  • § 25:3 : The Nature of Insurance25-5
  • § 25:4 : General Types of Insurance Involving Leased Assets25-8
    • § 25:4.1 : Insurance Policies25-8
      • [A] : Declarations25-8
      • [B] : Who Is an Insured?25-9
      • [C] : Limits of Insurance25-10
      • [D] : The Coverages25-10
      • [E] : The Definitions25-11
      • [F] : The Exclusions25-11
      • [G] : The Conditions25-12
    • § 25:4.2 : First-Party Insurance25-12
      • [A] : Property Damage25-12
        • [A][1] : The Coverage25-12
        • [A][2] : Potential Coverage Issues Generally25-13
      • [B] : Business Income25-15
      • [C] : Other Common Coverages and Exclusions25-16
        • [C][1] : Terrorism Coverage and Exclusions25-16
        • [C][2] : Earthquake, Flood, Windstorm25-18
        • [C][3] : War25-18
        • [C][4] : Total Loss Only25-19
    • § 25:4.3 : Third-Party Insurance25-19
      • [A] : Comprehensive or Commercial General Liability Insurance25-19
      • [B] : Umbrella and Excess Liability Insurance25-21
      • [C] : Common Endorsements and Exclusions25-22
        • [C][1] : Workers’ Compensation25-22
        • [C][2] : Pollution25-23
        • [C][3] : Specialty Coverages25-23
    • § 25:4.4 : Specialty Coverages for Lessors and Lenders25-23
      • [A] : Lessors’ and Lenders’ Own First- and Third-Party Insurance25-23
      • [B] : Lessor’s or Lender’s Single Interest25-24
      • [C] : Contingent Physical Damage25-24
      • [D] : Residual Value Insurance25-25
  • § 25:5 : Insurance Protection of Lender’s and Lessor’s Interests25-25
    • § 25:5.1 : Parameters and Priority of Coverage25-25
      • [A] : Insured Status25-25
        • [A][1] : Additional Insured Versus Named Insured25-25
        • [A][2] : Loss Payee25-28
        • [A][3] : Lender’s Loss Payable Endorsements25-29
        • [A][4] : Contractual Liability Coverage25-29
        • [A][5] : Notice to Insurance Company25-30
        • [A][6] : Insurable Interest25-31
      • [B] : Other Insurance—Priority of Application25-31
    • § 25:5.2 : Breach of Warranty25-33
    • § 25:5.3 : Limits25-34
    • § 25:5.4 : Deductibles25-34
    • § 25:5.5 : Cancellation and Changes25-35
    • § 25:5.6 : Subrogation25-35
    • § 25:5.7 : Quality of Insurance Company25-36
    • § 25:5.8 : Evidence of Insurance25-37
  • § 25:6 : How to Purchase Insurance25-38
    • § 25:6.1 : The Forms25-38
    • § 25:6.2 : Brokers25-39
      • [A] : Brokers As Agents25-39
      • [B] : Role in Placement25-39
      • [C] : Role After Placement25-40
      • [D] : Role in Claims25-40
  • § 25:7 : Checklist of Concerns for Lessors/Lenders and Lessees25-41
  • § 25:8 : How to Make and Pursue an Insurance Claim25-43
    • § 25:8.1 : Locate Evidence of the Coverage25-43
    • § 25:8.2 : Read the Policy25-44
    • § 25:8.3 : Give Notice25-44
    • § 25:8.4 : Quantify the Claim25-44
    • § 25:8.5 : Be a Squeaky Wheel25-45
    • § 25:8.6 : Be Aware of Policy Deadlines25-45
    • § 25:8.7 : Avoid Appraisal25-46
    • § 25:8.8 : Conclusion—Be Prepared25-46
    • Chapter 26: ERISA Implications Gary S Rothstein ~ Morgan Lewis & Bockius LLP
    Craig Bitman ~ Morgan Lewis
  • § 26:1 : Introduction26-2
  • § 26:2 : Prohibited Transaction Rules26-2
    • § 26:2.1 : Categories of Prohibited Transactions26-2
    • § 26:2.2 : Liability for Engaging in Prohibited Transaction26-3
    • § 26:2.3 : Plan Asset Regulations26-4
  • § 26:3 : Application of Rules in Leveraged Lease Context26-5
  • § 26:4 : Allocating and Managing the Risk of Prohibited Transactions26-7
    • § 26:4.1 : Participation Agreement Representations26-7
    • § 26:4.2 : Diligence Exercise26-8
    • § 26:4.3 : Department of Labor “Prohibited Transaction Class Exemptions”26-8
  • § 26:5 : Widespread Offerings26-11
  • Appendix 26A : ERISA RepresentationsApp. 26A-1
  • Appendix 26B : 144A DisclosureApp. 26B-1
    • Chapter 27: Consumer Personal Property Leasing Peter L Cockrell ~ Hudson Cook LLP
    Thomas B Hudson ~ Hudson Cook
    Daniel Laudicina ~ Hudson Cook
    Meghan Musselman ~ Hudson Cook LLP
  • § 27:1 : Overview of the Consumer Leasing Industry in the United States27-3
  • § 27:2 : Federal Regulation of Consumer Leasing27-5
    • § 27:2.1 : The Consumer Leasing Act27-6
      • [A] : Consumer Leasing Act Disclosures27-7
      • [B] : CLA Disclosure Requirements27-7
      • [C] : Consumer Liability at Lease Termination27-8
      • [D] : Consumer Lease Advertising27-9
      • [E] : Practical Effects of the Consumer Leasing Act’s Requirements27-10
    • § 27:2.2 : Reg. M27-10
    • § 27:2.3 : Federal Reserve Board Official Staff Commentary to Reg. M27-12
  • § 27:3 : State Regulation of Consumer Leasing27-13
    • § 27:3.1 : Article 2A27-14
      • [A] : Choice of Governing Law27-15
      • [B] : Exclusion and Modification of Warranties27-16
      • [C] : Finance Leases27-18
    • § 27:3.2 : State Consumer Leasing Statutes27-19
      • [A] : Notice States27-19
      • [B] : Cost Disclosure States27-20
      • [C] : States with Comprehensive Leasing Statutes27-21
      • [D] : Parallel Reg. M-Type States27-23
      • [E] : States with No Consumer Leasing Provisions27-24
    • § 27:3.3 : UCCC Regulation of Leasing27-24
      • [A] : Delinquency Charges27-25
      • [B] : Notification Requirements27-26
    • § 27:3.4 : General Consumer Protection Statutes27-26
      • [A] : Plain-Language Laws27-27
      • [B] : Additional Notice Requirements27-27
      • [C] : Additional Substantive Requirements27-28
  • § 27:4 : Litigation Over Consumer Lease Requirements and Disclosures27-28
    • § 27:4.1 : Interest on Security Deposits27-28
    • § 27:4.2 : Calculation, Imposition, and Disclosure of Early Termination Charges27-30
    • § 27:4.3 : Board Response to Litigation27-33
  • § 27:5 : Future Developments in Leasing Law27-34
  • § 27:6 : Conclusion27-35
  • Appendix 27A : 12 C.F.R. Part 213App. 27A-1
    • Chapter 28: Doing Business Under State Corporation Laws Sandra B Feldman ~ CT Corporation System
  • § 28:1 : Introduction28-2
  • § 28:2 : Penalties for Failure to Qualify28-4
    • § 28:2.1 : Suits by Unqualified Foreign Corporations28-4
    • § 28:2.2 : Effect of Subsequent Qualification28-7
    • § 28:2.3 : Defense of Suits28-10
    • § 28:2.4 : Validity of Corporate Acts28-11
    • § 28:2.5 : Counterclaims28-11
    • § 28:2.6 : Suits by Assignees and Successors28-13
    • § 28:2.7 : Personal Liability28-14
    • § 28:2.8 : Monetary Penalties28-15
  • § 28:3 : Specific Doing-Business Activities28-15
    • § 28:3.1 : Introduction28-15
    • § 28:3.2 : Doing Business in Interstate Commerce28-17
    • § 28:3.3 : Isolated Transactions28-20
    • § 28:3.4 : Leasing Personal Property28-23
    • § 28:3.5 : Leasing Real Property28-27
    • § 28:3.6 : Personal Property Ownership28-28
    • § 28:3.7 : Solicitation28-29
    • § 28:3.8 : Lending Money on Security28-30
    • § 28:3.9 : Collecting Debts28-32
    • § 28:3.10 : Extending Credit28-33
    • § 28:3.11 : Acting As Trustee28-34
    • § 28:3.12 : Conducting Internal Affairs28-35
  • Appendix 28A : Statutory CitationsApp. 28A-1
  • Appendix 28B : Statutory Doing-Business Provisions Limited to Lending Money on SecurityApp. 28B-1
    • Chapter 29: Lessor Liability Barry S Marks ~ Baker Donelson Bearman Caldwell & Berkowitz PC
  • § 29:1 : Introduction29-1
  • § 29:2 : Negligence29-3
    • § 29:2.1 : Introduction29-3
    • § 29:2.2 : Restatement Answer29-3
    • § 29:2.3 : Other Possible Grounds of Negligence Liability29-5
  • § 29:3 : Strict Liability29-7
  • § 29:4 : Warranty29-14
    • § 29:4.1 : U.C.C. Section 2A-21629-14
    • § 29:4.2 : General Statutory Limitations29-16
    • § 29:4.3 : Article 2A Finance Leases29-17
  • § 29:5 : Specific Types of Equipment29-18
    • § 29:5.1 : Motor Vehicles29-18
    • § 29:5.2 : Aircraft29-22
    • § 29:5.3 : Vessels29-24
  • § 29:6 : Conclusions and Suggestions29-27
    •   Glossary
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    ”Equipment Leasing-Leveraged Leasing is the ’bible’ for the leasing industry.” 
    Ted Wright Verrill, Managing Director, Daimler/Chrysler Capital Services

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