LEAN ENFORCEMENT ANALYSIS & NEWS
More on the Prolonged Downturn By: Barry Marks and Ellen Dover
Some time ago we advised that the recent economic upheaval will continue to have an adverse impact on the leasing industry even after recovery seems to have arrived. Among other things, not only are new fraud schemes becoming more common, old fraudulent deals are making themselves known.
We advised, among other things, that existing portfolios should be checked for fraud and immediate action taken, such as pulling UCC searches and making inspections. All parties should redouble efforts to spot new fraud as well, since as even good lessees may succumb to temptation as the economy weakens.
Since our original article entitled, “Preparing for the Continued Downturn,” we are providing an update, based in part on responses we have received. The following is some of the additional information we think lessors, funders and originators should digest and consider as we all attempt to catch the next wave (okay, the modest swell) we are hoping for...
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Forum Selection Clauses By: Brittany Ogden
Hannah Arendt said, “Promises are the uniquely human way of ordering the future, making it predictable, and reliable to the extent that this is humanly possible.” And nothing is less predictable or reliable than litigation. However, companies continuously endeavor to find ways to shine a light into the murky future and make things as predictable as possible. One way is a forum selection clause in contracts.
Introduction
The Restatement (Second) of Conflicts of Laws states that “[t]he parties’ agreement as to the place of the action will be given effect unless it is unfair or unreasonable.” Such a clause will be enforced unless there is a strong reason to set it aside.
Historically, forum selection clauses have not been favored by American courts...
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Preparing for the Continued Downturn By: Barry Marks and Ellen Dover
Economic downturns present something of a “double whammy” for the leasing industry.
The first bad news is operational and entirely expected: Funding dries up, defaults mount and margins are squeezed in an effort to attract the remaining high-quality customers.
The second problem is more subtle: New attempts to defraud the lessor are likely as customers become financially constrained and the truly crooked know that hard-pressed salesmen will be even more eager to book a transaction. At the same time, deals that have been buzzing along with no apparent problem hit the proverbial wall and, on attempting to recover collateral many lessors find to their horror that the deal was fraudulent all along.
This article will discuss a few things that leasing companies and brokers should do to minimize the damage.
Avoiding Fraud
There are ample resources around the internet and from the major leasing associations discussing ways to avoid fraudulent transactions. The important thing is to take the time to educate sales and operational staff in how to
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Shortening the Collection Curve By: James M. Lloyd
Tough times call for tough collection processes and strategies. The diligent creditor will continue to win the day. Streamlining and improving your in-house collection processes will improve your bottom line and also improve the efficiency of third party efforts when the need arises.
Current economic conditions mandate more than ever the importance of creditor vigilance. Customers experiencing reduced sales and lagging receivables of their own will quickly resort to stretching out their vendors attempting to establish longer payment terms and redefine the ordinary course of business between the parties.
Secured creditors that have retained a secured interest in specific collateral, as well as lessors of goods, have additional leverage over the unsecured trade creditor given the contractual right of possession in the event of default.
Peaceful Repossession and Replevin
Repossession and replevin are often viewed as a last resort. However, in tough economic times when customers may tend to delay payment, the diligent creditor needs to be
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Equipment Leases in CT - New Disclosure Requirement Coming By: Richard C. Feldman
A bill has been proposed by the Connecticut House of Representatives which will change the requirements for disclosure in equipment leases. Since the bill was unanimously adopted it appears that it will pass and be effective October 1, 2009. Although the bill is an amendment to the Consumer Leases Act, it is intended to include Article 2A finance leases.
Existing law relating to consumer leases requires only that, if the lease does not provide required insurance at no additional cost to the consumer, the lessor must disclose that the consumer may purchase insurance from any insurer, subject to the lessor’s right to reject that insurance for reasonable cause. If casualty insurance is neither required nor provided, the lease must also state that “no insurance coverage for physical damage to the leased goods, or loss of leased goods, is provided under this lease.” The new bill requires that
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Required Reading for Banks and Leasing Companies By: Frank Peretore
If you are a workout or litigation specialist, find out the best way to manage your accounts and supervise outside counsel in Workouts and Enforcement for the Secured Creditor and Equipment Lessor. This is a must read to understand how to expertly protect and enforce creditors’ and lessors’ rights, maximize recoveries and minimize mistakes and lost opportunities.
Authored by LEAN member Frank Peretore, founding partner of Peretore and Peretore, P.C., present Legal Chair of NEFA and former Legal Chair of EAEL, this recently released book provides a comprehensive guide to the most ambitious yet efficient enforcement. No other book offers so many detailed strategies along with user-ready forms, all prepared from the perspective of the secured creditor and equipment lessor. For a special promotional price, click below.
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Effective Collections in a Troubled Economy By: Stephen E. Jenkins
In these troubled economic times, Equipment Lessors must shift and allocate their efforts to insure that they successfully collect the lease receivables. The purpose of this Article is to suggest several methods that should be employed to fine tune those collection efforts.
1. Documentation Tune-Up Lessors should carefully review their lease documentation to ensure that they have maximized their rights under state law to enforce their lease agreements. There are several provisions in the standard lease agreement which can be relied upon to maximize the lessor’s rights. These provisions include:
a. Finance Lease Status: Your Lease Agreement should provide that the Lease qualifies as a “Finance Lease” subject to the provisions of UCC Article 10. By qualifying as a Finance Lease, the lease is not generally subject to claims that the equipment is defective or does not operate.
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When a Good Lease Goes Bad: What Should You Do?
Lessee Defaults: An Outline for Action By: William L. (Bill) Phillips, III
A lessor’s reaction to a lessee default can take one of two forms. Too often, the immediate reaction is fear, confusion, anger and unproductive actions. With a little advance planning, the response can be confident, directed and programmed (we can’t do anything about the anger, of course).
What follows is an outline of actions we recommend clients consider in order to save valuable time, maximize their recovery and minimize counterclaims. It is not intended as a substitute for your counsel’s advice and is by no means exhaustive or exclusive; you may have other procedures already in place. It is, however a starting point to create your own decision tree and choose the right course of action when things begin to go wrong.
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Get P.A.I.D. - A sure-fire system for reducing collection problems and increasing profits By: Robert Bernstein, Esq.
Business owners and managers searching for better ways to reduce cost and improve relationships with their customers often overlook one of the most effective methods: credit policy. Credit policy isn’t just about collections. It’s a business strategy to enhance customer relationships and add value to a company.
According to Creditor’s Rights Lawyer, Business Bankruptcy Specialist and author Bob Bernstein, “Many businesses provide easy credit to their customers, thinking this will foster better relationships. But when they don’t pay, that philosophy backfires. You can end up losing both the money and the customer.”
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HOW TO DETECT LEASING FRAUD By: Robert B. Liddell, Esq.
In this age of information and technology, you might expect to learn a new, high-tech formula for detecting fraud. In fact, the same automation that creates a streamlined and efficient process can be one of the contributing factors to leasing fraud. The best ways to detect fraud still involve the simple, back to basics methods that have been proven effective and relied upon for years.
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