The Greene Room
The midyear is upon us. What better time to take a look back at a few important legal decisions that happened so far in 2026. They may impact your equipment finance/leasing business.
The industry experienced several significant legal developments so far this year. Courts have focused on issues that strike at the heart of secured lending, including lease characterization, collateral ownership, perfection of security interests and contractual enforcement, all of which are critical foundations to the success of anyone in this space. Although no single Supreme Court decision reshaped the industry, a series of bankruptcy and commercial law cases does provide valuable guidance to lenders, lessors, brokers and finance companies.
As my last article discussed, one of the more significant developments arose from bankruptcy proceedings involving Cool Springs LLC and some related equipment financing disputes. In that case, the Court held that a lender’s security interest failed because the debtor never acquired sufficient ownership rights in the financed equipment. The ruling reinforced a fundamental principle of Article 9 of the Uniform Commercial Code, which has been adopted in one form or another in every state, to wit, a security interest cannot attach unless the debtor possesses rights in the collateral. For equipment financiers, the decision serves as a reminder that documenting title transfers and ownership rights is just as important as obtaining signed loan documents.
Another important 2026 decision involved East Texas Machining & Manufacturing. The Bankruptcy Court for the Eastern District of Texas ruled that a creditor lost its perfected security interest because of an error in the debtor’s name on a UCC financing statement. The Court concluded that the filing was seriously misleading and therefore ineffective. As a result, the creditor’s claim was treated as unsecured. The case highlights the continuing importance of meticulous UCC filing practices and demonstrates that even seemingly minor clerical errors can have devastating consequences in bankruptcy. It is something I see all the time. Ironically, it takes little time to draft a proper UCC financing statement collateral description. The downside to not paying attention to the requirements can be simply devastating.
Courts also continued to address the enforceability of forum-selection clauses in equipment finance agreements. Several Florida cases resulted in venue dismissals where borrowers attempted to avoid contractual forum provisions. The Courts generally upheld the parties’ contractual choice of venue, reaffirming the industry’s reliance on carefully drafted finance documents. These rulings provide greater predictability for national lenders who operate across multiple jurisdictions and seek consistent enforcement of their agreements.
The ongoing litigation arising from the collapse of First Brands Group remained one of the most closely watched legal matters in the equipment leasing industry. The bankruptcy raised complex questions regarding sale-leaseback transactions, true lease characterization, ownership of leased assets and the distinction between leases and disguised secured financings. Lawyers, lessors and lenders (oh my) have been monitoring the proceedings because the ultimate outcomes may influence how Courts evaluate large-ticket leasing structures in future insolvency cases.
Finally, Courts continued to scrutinize “hell or high water” clauses, a foundational feature of finance leases under UCC Article 2A, a cornerstone of equipment finance once believed to be virtually immutable. While Courts generally upheld these provisions, recent decisions emphasized that enforceability depends on proper drafting and compliance with applicable statutory requirements. These cases underscore the importance of ensuring that finance lease documentation clearly establishes the parties’ rights and obligations.
Taken together, the most significant equipment finance and leasing cases of 2026 shared a common theme: PROPER AND ACCURATE DOCUMENTATION MATTERS! Whether involving collateral ownership, UCC perfection, venue selection, lease characterization or payment obligations, Courts consistently rewarded parties that maintained precise records and carefully structured transaction documents. For equipment finance professionals, the lessons from 2026 reinforce the need for rigorous underwriting, documentation and collateral management practices in an increasingly complex legal environment.
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