Equipment Financing Risks in Bankruptcy: Implications of Lease vs. Secured Transaction
Treatment of Equipment Leases in Bankruptcy and Recharacterization of Lease as a Sale
Recording of a 90-minute CLE webinar with Q&A
This CLE course will examine the risks equipment lenders or lessors face following a borrower/lessee’s bankruptcy. The program will review the treatment of an equipment finance loan under the UCC and in bankruptcy as well as the treatment of an equipment lease in bankruptcy. The panel will discuss the risks for equipment lessors when the lease is challenged by the debtor and the transaction is recharacterized as a sale, including factors the courts will consider in determining whether a transaction is a sale or a lease.
- Overview of equipment financing: lease vs. sale
- Perfecting a security interest in equipment under UCC Article 9
- Secured lender’s rights in bankruptcy
- Treatment of equipment leases in bankruptcy
- Assumption vs. rejection of executory contracts
- Cure of defaults
- Protections for the lessor
- Recharacterization of an equipment lease as a financing transaction
- Factors courts will look at to determine the true nature of transaction
- Legal ramifications for the lender/lessor if the lease is recharacterized
- Best practices for lenders and lessors to protect their interest in the collateral
The panel will review these and other key issues:
- What are the lender’s rights under the UCC with respect to its security interest in the equipment in the event of the borrower’s bankruptcy?
- What are the lessor’s and debtor/lessees’s rights in bankruptcy with respect to an equipment lease?
- What are the pitfalls for an equipment lessor if the lease is recharacterized as a sale?
- What factors will the bankruptcy court consider in determining whether the transaction is a lease or a financing?
- What proactive measures can equipment lessors take to protect their interests in a subsequent bankruptcy proceeding?
George K. Miller
Mr. Miller is a member of the firm’s Global Projects, Infrastructure and Asset Finance Practices. He concentrates... | Read More
Mr. Miller is a member of the firm’s Global Projects, Infrastructure and Asset Finance Practices. He concentrates his practice in international and domestic finance and leasing, in particular in the infrastructure, transportation and energy sectors. Mr. Miller has worked on numerous “Deals of the Year” and other high-profiles transactions in the projects and infrastructure space.Close
Craig M. Price
Chapman and Cutler
Mr. Price has represented large Chapter 11 debtors, various creditors’ and equity committees, hedge funds,... | Read More
Mr. Price has represented large Chapter 11 debtors, various creditors’ and equity committees, hedge funds, secured lenders, acquirers and other creditors. His experience includes conducting negotiations, drafting motions, memoranda of law, objections and other pleadings as well as conducting discovery. Mr. Price has negotiated numerous asset sales and secured financing transactions as well as made numerous court appearances in both federal and state court.Close
Franklin H. Top, III
Chapman and Cutler
Mr. Top is Co-Practice Group Leader of the firm’s Litigation, Bankruptcy and Restructuring Group. He has... | Read More
Mr. Top is Co-Practice Group Leader of the firm’s Litigation, Bankruptcy and Restructuring Group. He has experience working in the area of bankruptcy, creditor rights, restructuring and litigation, and has appeared in cases of national prominence. Mr. Top has represented indenture trustees, noteholders, and creditor’s committees. Bankruptcy activities have included the defense of avoidance actions, motions for adequate protection, and filing and defending proofs of claim.Close