Lessors of Motor Vehicles Often Held Strictly Liable for Lessees' Damage

Many lessors have sighed in relief as the Graves Amendment generally appears to have addressed various state laws, which previously held lessors of motor vehicles strictly liable for damage caused by their lessees. However, the recent case of U.S. v. Saporito, reminds us that strict liability laws are still out there.... read more

The Taylor Decision & Avoidance Remedies in Bankruptcy

The case In re Taylor illustrates that the determination that the transfer of the security interest should be avoided is only the first step in granting relief to the estate, and formulating the proper remedy for the estate is more complicated than it would appear both practically and legally.... read more

Meet John Doe: A Little Something About Sole Proprietorships

This issue of Dispatches From the Trenches discusses sole proprietorships (d/b/a), and explores some of the increased risks associated with lessees that fall into this category. These risks include the location, name and movement of the debtor as well as the transfer of collateral.... read more

BALCAP Case: Conflicting Statutes Make for Bad Law for Judgment Lien Creditors

The recent case of Banc of America Leasing & Capital vs. 3Arch Trustee Services, Inc. decided on January 5, 2010, describes what judgment lien creditors might say is an unfair result shutting BALCAP out of the money on its recorded judgment lien. Here is another case where conflicting statutes make for bad law. ... read more

A Question of Form or Substance

This edition of Dispatches From the Trenches discusses: whether an assigned lease is part of the assignor’s bankruptcy estate; and whether a lessee has a valid cause of action if a lessor misrepresents that the “lease” is really a loan. Mixed goods and services transactions and conflicting choice of law provisions are also mentioned.... read more

Court Decision Marks the End of the Road for the Chapter 7 Ride-Through Option

Under the ride-through option, debtors had an option in bankruptcy … to retain vehicles without reaffirming the debt and without redeeming the collateral. They could simply continue to make the monthly payments. If the debtor defaulted, lenders could repossess. However the Ninth Circuit of Appeals recent decision in the Dumont case may have taken that option away.... read more

Fraudulent Inducement, Mistake & Unconsionability Defenses and the Importance of Language

This edition of Dispatches from the Trenches discusses: a borrower’s attempt to avoid its obligations under an equipment financing agreement by asserting the defenses of fraudulent inducement, mistake and unconsionability, and why lessors should make sure their leases have standard language noting that the equipment does not constitute a fixture and is removable from and not essential to the premises where the equipment is located.... read more

Can Non-Debtors Be Discharged Through a Debtor’s Bankruptcy Reorganization Plan?

This article arises because of a very recent case entitled The Pacific Lumber Co, 2009 West Law 3082766; 2009 U.S. App. LEXIS 21749 filed in the Fifth Circuit. Among many other issues, it revisits the issue as to whether a plan of reorganization can release non-debtors from liability. Before getting to this case, a discussion of the law regarding non-debtor releases is appropriate. ... read more

An Update on Payment Intangibles & Case Law Regarding a Lessor’s Rights as an Additional Insured

This edition of Dispatches from the Trenches covers two areas: 1.) to provide an update regarding the holding of In re Commercial Money Center regarding payment intangibles, and 2.) analyze a recent case that may make you question your reliance on certain certificates of insurance. ... read more

Where Bankruptcy & Suretyship Law Collide

In a complex case, the Ninth Circuit Court of Appeals has addressed a series of critical issues involving the operation and effect of a prepetition release by a surety and a “revival” provision in a settlement as well as the ability of an unsecured creditor to include in its unsecured claim attorneys’ fees and costs. The decision provides some important guidance for creditors in the drafting and enforcement of revival provisions in a settlement.... read more

Fair and Clear: Liquidating Damages and Indemnity Provisions

This edition of Dispatches From the Trenches discusses two recent cases from the perspective of liquidated damages and indemnity provisions: National City Healthcare Finance v. Refine 360, LLC and Midwest Concrete Placement, Inc. v. L&S Basements, Inc. The two cases illustrate the necessity of being both fair in terms of liquidated damages provisions and clear with regard to indemnification provisions... read more

Issues With Proving Up Damages From Computer Records

In the following article, Andrew Alper looks back to 2005, the case In re Vinhnee and the issues with the provision of foundational evidence required by the court with regard to the introduction of computer records. As he shares from his own experience, when relying on the Vinhnee case, the court can get hung up on the matter of a witness’ ability to “import an aura of verisimilitude.” And that can be confounding.... read more

Understanding Fixtures and Special Priority Rules in Lease Default Claims

In a rough economy, lessors are more frequently faced with competing claims against equipment on lease to defaulted customers. Some of these claims come from landlords or mortgagees who have an interest in the premises on which the leased equipment is located. Such claims can be particularly troublesome if the leased equipment may be considered fixtures under state law.... read more

Commercial Mortgage Backed Securities: Dafaults and Workouts

The very structure of many commercial loans, and the relationship between rents collected and mortgage payments, have the effect of deferring loan defaults for a while. Signs are beginning to appear, though, that delinquencies are sure to accelerate. When they do, there will be an avalanche of defaults, of which perhaps 20% will be of loans that are now held in commercial mortgage-backed securities trusts falling under the general description of “commercial mortgage-backed securities” (CMBS).... read more

Documentation of Certificates of Title Drum Up a Complex Dance Between Parties

Stepping out of the familiar and more-or-less uniform terrain of the UCC and into state title laws has proven perplexing, expensive and, in some cases, disastrous for motor vehicle lenders and lessors. At the end the day, the interplay between the generally uniform provisions of the UCC and the various state Certificate of Title laws resembles a complex dance, which must be attempted with caution.... read more

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