Structuring Equipment Financing: Developments for 2018

New Lease Accounting Rules; Bundling With Services and Software; Recent Cases on UCC and Bankruptcy Treatment

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, February 6, 2018

Recorded event now available

or call 1-800-926-7926

This CLE webinar will examine important new developments in equipment financing, including the new lease accounting standards and bundled lease structures which include service components. The panel will also discuss recent case law regarding “true lease” categorization, damages and other issues, and how recently enacted tax reform might affect tax treatment of equipment leases.

Description

Equipment finance practice is continually evolving and will be affected on several fronts in 2018. Financial statement preparers for both lessees and lessors are busy identifying and resolving the many technical accounting issues associated with the implementation of the new lease accounting standards (Accounting Standards Update No. 2016-02; Topic 842). At the same time, the new tax reform bill will have significant implications regarding the core issues pertinent to equipment finance.

Lessees will need to determine financial reporting and tax objectives in structuring and pricing equipment leases going forward, including factors such as lease duration, control of equipment, lease payments and purchase options.

The sale of equipment is often bundled with software and services provided by the vendor relating to maintenance and operation. This further complicates the related equipment finance transaction, which must contemplate continued involvement by the vendor and a separate service agreement to operate in tandem with the equipment financing.

Several notable court rulings in 2016-17 involve disputes between parties to equipment financing transactions. The issues considered include whether a transaction documented as a lease creates a “true lease” or a UCC security interest; the rights of assignees; waivers of defenses and “hell-or-high water” payment obligations; vicarious liability of a lessor; and lessor’s damages remedies. These cases provide valuable insight to counsel in structuring equipment finance transactions.

Listen as our authoritative panel discusses how each of the foregoing may impact the structure and enforcement of equipment financing transactions. The panel will also analyze how the new tax law might change treatment of equipment leases under the tax code.

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Outline

  1. Equipment finance—standard lease structures
    1. Capital leases
    2. Operating leases
  2. New lease accounting standards—change in treatment of operating leases
  3. Bundled or mixed equipment transactions
  4. Recent case law
  5. Effect of tax reform on equipment financing

Benefits

The panel will review these and other key issues:

  • What is the significance of the new lease accounting standard, and what is the compliance timeline?
  • How should bundled services and products be reflected in equipment leases?
  • What do recent court decisions say about when a lease is deemed a “true lease” as opposed to a lease that creates a security interest? What is the significance in bankruptcy?
  • How will tax reform impact equipment financing?

Faculty

Blau, Denise
Denise L. Blau

Shareholder
Vedder Price

As a member of the firm’s Tax Practice and the Global Transportation Finance Team, Ms. Balu focuses on federal...  |  Read More

Gross, Edward
Edward K. Gross

Shareholder
Vedder Price

Mr. Gross has over 25 years of experience representing bank-affiliated and large, independent equipment financing...  |  Read More

Liberatore, Dominic
Dominic A. Liberatore
Deputy Chief Counsel
De Lage Landen Financial Services

Mr. Liberatore has been practicing law for 28 years focusing in the areas of leasing and asset based lending, and has...  |  Read More

Nagus, Drew
Drew Nagus
Senior Manager
Ernst & Young

Mr. Nagus has over 14 years of experience in both Public Accounting and industry, including 13 years of audit and...  |  Read More

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