From: David G. Mayer, a business transactions partner of the law firm of Patton Boggs LLP and author of the book, Business Leasing for Dummies® (BLFD). The book is out of print, but copies may still be available; so if you want to find a copy, please search the web today! Thanks for buying my book for over three years.
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"Offering leasing and financing strategies for your success"
FEBRUARY 2005
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Norvergence Bankruptcy
Forces Lessors To Mitigate New Risks
Just as the leasing industry began to move beyond a spate of negative publicity regarding alleged off-balance sheet account schemes, the Norvergence case created yet another wave of public outcry against leasing, this time by state Attorneys General and Norvergence representatives. Facing allegations of collusive and corrupt behavior, lessors, including the institutions that funded Norvergence leases, have to wonder how to protect themselves against any repeat of this legal morass. Background of Case Norvergence allegedly entered into contracts with small to mid-sized businesses and other organizations to provide discounted telecommunications equipment and services. It then sold those contracts, which purported to be leases, to funding sources/successor lessors without the knowledge of the lessees. Each funding source paid value for the negotiated contract concurrently with the assignment from Norvergence. The leases bundled equipment usage and related telecommunications services. As is typical in these transactions, the funders apparently believed that, regardless of actions by the assignor (Norvergence), the hell and high water and waiver of defense clauses in the leases would protect them, and the lessees would always be contractually obligated to pay them rent when due. Unfortunately for the funders, the lessees had different ideas. Norvergence allegedly did not acquire the long-term contracts with telephone service providers and could not and did not deliver telephone and other services to the lessees, even though Norvergence allegedly assured its customers it had secured those long-term commitments. The lessees also alleged that the equipment then, and at all times, had little or no value, despite high rents charged for certain equipment. When the lessees received no telephone services, they stopped paying the rent to the funders. The non-payment challenged the tried and true hell and high water and waiver of defense clauses in their leases, and captured the attention of the assignee/successor lessors. These clauses establish the legal and economic justification for many, if not all, assignments of leases, back leveraging transactions and other funding of lease portfolios. The lessees and various state Attorneys General have not only alleged that Norvergence duped the lessees, but also that the lessors knew and should have known of the scheme perpetrated by Norvergence. For a more detailed summary of the allegations, see: Well-Established Lease Terms Under Scrutiny - What will be the legal fallout from the Norvergence Bankruptcy?, by Paul Gamez, Equipment Leasing Today at page 34 (Jan. 2005). While the outcome of these cases is unknown, several lessors have settled as the least expensive way to exit a bad situation. Other lessors will fight the cases because they presumably believe that funders did no wrong. Revised Transaction Structuring and Process Most people familiar with the Norvergence case may have an opinion about the rights and wrongs of the players in the drama. However, lessors may prefer to identify the affirmative steps to take when entering transactions that in any way resemble the Norvergence lease assignments (especially potentially high volume single, source relationships). Lessors need not shy away from high volume, single source assignment transactions if they:
*Tip: When one source produces a high volume of transactions involving services, lessors/funders should remain alert to the ability of the service provider to meet its obligations to the lessees. In addition, lessors should periodically obtain assurance that the equipment performs fully for its intended purpose. As a lessor/funder, the prudent exercise of such due diligence may spare you from trouble like the funders experienced in Norvergence.
*Warning: This approach is incompatible with private label programs (a program in which a lessee does not know about the lessor/funder’s existence). Further, an estoppel probably wouldn’t work for small ticket deals because they require extremely brief documentation.
The list above is far from complete, but it may start a better process of protecting the interests and expectations of the parties to assignment transactions. Lessors should accept the reality that, regardless of the quality of their operations and processes, leasing may continue to encounter some unfavorable public impressions this year. Accordingly, lessors should consider acting more than above-board, document their diligence fully and price deals according to the additional risks raised by this case. Thanks to Paul Gamez of Great America Leasing Corporation for editing this article.
2. Venture Capital Gains Momentum as It Opens a Window of Opportunity For the first time in four years, venture capital returns and fund raising have begun to grow at a pace that is consistent with the period before the tech bust in 2000. During the period since 2000, billions of dollars of venture capital money has remained on the sidelines as venture capitalists (VCs) focused on saving existing portfolio companies and taking a more deliberate approach to making new investments. Because a substantial portion of money committed to venture capital funds is designated for new investments, as opposed to follow-on investments in existing portfolio companies, VCs with maturing funds must either deploy these funds in new investments in the near future or they will be forced to return them to their investors and forfeit substantial management fees. As a result, VCs appear willing to invest funds early this year, not only in the traditional technology and bioscience companies, but also other industries. Graceful Exits by Venture Capitalists Google’s initial public offering of stock in August 2004 was the most anticipated in the technology and venture capital community since the technology bubble burst in 2000. This offering, which priced at $85 per share, turned a relatively modest $25 million venture capital infusion into a $3.8 billion investment. At the market price last month of around $192 per share, that stake had more than doubled in value. As seems to be customary in venture capital, most technology and biotech companies backed by VCs made initial public offerings. Biotech enjoyed particularly robust results with 253 initial public offerings last year. That number tripled the IPOs in 2003. In 2004, biotech companies also received 11 percent greater investments from venture capital than 2003, for a total of $6.6 billion in fresh capital. See: Surge in biotech investments fuels overall VC gain, by Jim Hopkins, USA Today online (Jan. 20, 2005). Other venture capitalists exited investments by completing 376 sales of venture-back companies to other corporate buyers for about $22.6 billion, according to VentureOne, a Dow Jones & Co. industry tracker.Venture Capital Investments Venture capitalist even improved on their investments from the $18.7 billion level in 2003. According to the PricewaterhouseCooper’s MoneyTree Survey (created jointly with Thomson Venture Economics and the National Venture Capital Association), venture capitalists made quarterly investments of about $4.3 billion in the third quarter, a bit lower than the previous quarters, which floated between $4.2 billion and $5.9 billion. VCs invested in 601 companies in the third quarter. The level of investing for 2004 is expected to hit a high of $20 billion.Tracy Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers, observed: "We see a market that is seeking its natural level. There is a balance between earlier and later stage investing. There is a natural mix of industry segments based on market opportunities, and a balance between risk and reward for venture capitalists and entrepreneurs alike." See: 2004 Venture-Backed Ipo Activity Exceeded Prior Three Years Combined, National Venture Capital Association, Press Release (Jan. 3, 2005).*Tip: Companies looking for venture capital should pursue such funding only for growth (and not to pay current bills) as the time between initial contact and funding by VCs can take six months or more. To help shorten this process, companies should ensure that their corporate house is in order by adequately protecting intellectual property, maintaining a clean capital structure and following corporate formalities.Sector and Industry Analysis The life sciences sector (biotechnology and medical devices industries) continued to dominate venture capital investment in the third quarter of 2004 with a total of $1.26 billion, or 29 percent, of all venture capital funding, spread over 127 life sciences companies. Following closely behind, 160 companies in software industry received $942 million in the same quarter. At $450 million of investments, telecommunications companies only attracted 10 percent of all venture capital, covering only 58 companies, most of which involved follow-on rounds. The networking industry fared even worse at $314 million, or 7 percent of total funding, covering only 43 companies. Other major industry categories experienced similar proportionate declines in the third quarter. For more on the segment analysis, see MoneyTree Segment Survey.*Tip: Despite the continued concentration in a few industry segments, Tracy Lefteroff, Managing Partner of PricewaterhouseCoopers’ venture capital practice, expects the industry to branch out into new sectors. These sectors include stem-cell research, energy, clean technology, biometrics, digital media and financial services. As investment increases, more investment capital is expected to move overseas to find acceptable deals. See: How Venture Capital Got Its Groove Back, The Wall Street Journal (S.W. Ed.), R:16, Col. 1, Jan. 3, 2005.As VCs look to move money from the sidelines into companies, they have shifted their focus more to traditional measurements of value such as strong management, opportunities for significant market growth and customer traction (reliable earnings and cash flow) rather than pure unbridled enthusiasm for an industry segment. *Remember: If your company is seeking venture capital, remember that experienced VCs can offer you practical management guidance beyond their cash infusion. Therefore, companies seeking VC money in any of the expansion sectors (as well as technology and bioscience companies) should target venture capital firms (and the partners within those firms) with relevant industry experience capable of adding that extra value.While the third quarter of 2004 dipped from the earlier performance, VCs seemed unfazed. The likelihood that new investing will continue to grow for now seems clear and firm. According to Thomson Venture Economics, the problems created by the tech bubble have given way to a healthier, strengthening and well-balanced market. See: Venture Capital Returns Showed Continued Improvement in Q3 2004, PR Newswire-First Call, United Business Media (Jan. 19, 2005).*Opportunity Point: Now is a great time for entrepreneurs to approach VCs for funding. Many venture capital funds raised in 2000 will be closed after 2005 to new investments, so VCs must either deploy the "overhang" funds of $13.5 billion in the next four to six months or return the funds to their investors. To avoid returning funds, VCs could broaden their targeted companies and invest in companies beyond hot sectors such as wireless networking, e-commerce, voice over Internet and mobile content. See: Why It’s Pouring VC Cash, Business 2.0 at p. 76 (Jan./Feb. 2005). In addition, with increased VC investment, venture leasing (lessors and lenders that invest in equipment in emerging growth companies) may become more active. If you work with venture-backed companies, you should carefully track and participate in the growth of venture capital investments as VCs increase their investing, diversify target companies and reach for new overseas targets. As they do so, look for VCs to welcome venture leasing and lending to help them preserve their capital for other uses in the new and existing companies in which they invest.Thanks to Akash Sethi for his insightful and valuable editing of this article. Akash is an associate in our Corporate Finance Group. He is involved in transactions such as mergers and acquisitions, private placements of securities, venture capital financings, credit facilities and public offerings.
3. In Troubled International Leases, Should Lessors Litigate or Arbitrate? You have entered into a leasing agreement for a power plant in the Middle East that is needed to provide electricity to a city with one million people. The plant is one and one half years late coming on line. The construction contractor for the plant now owes your company tens of millions of dollars in liquidated damages. You feel certain that this dispute will not be settled by agreement. What do you do: litigate or arbitrate? The situation is a bit complicated. Local Islamic law does not recognize western legal and business concepts as liquidated damages and interest. You cannot recall whether the construction contract contains an arbitration or litigation provision. Did it contain a provision that provide: "…all disputes arising from this agreement will be subject to arbitration before a panel of three arbitrators subject to the laws of the state of . . . and the provisions of the American Arbitration Association Rules." Alternatively, did the provision require: "…all disputes arising from this agreement will be adjudicated in the state and/or federal courts of …subject to the laws of the state of . . ."? When drafting leases or related agreements, carefully consider whether you should resort to arbitration or litigation to settle disputes. Are documents and witnesses located abroad? Is the subject matter of the dispute subject to foreign law? Where are the assets of each party located? What treaties apply? What law applies to the dispute? Should You Arbitrate? Some multinational corporations choose to provide for arbitration in their commercial agreements. By choosing arbitration, these companies view it as a quicker and easier process than civil litigation in state, federal, or even foreign courts. Arbitration has certain advantages over a civil court proceeding, including relaxed rules of discovery and evidence. The parties can negotiate the scope of the involvement of the arbitrators. Arbitrators do not require the production of original documents. The parties can seek to limit discovery. However, it may be in the interest of both parties to provide the other with access to all documents related to the controversy without having to rely on cumbersome treaty provisions and recourse to foreign courts to obtain them. On the other hand, the parties may agree to provide access solely to documents favorable to their side or those documents already available to both parties. The parties will exchange summaries of the case and applicable law with a chance for rebuttal and surrebuttal. Once the parties and arbitrators determine the procedural and evidentiary rules for the arbitration, the parties prepare their witnesses. In many cases, the parties submit written testimony as their direct testimony. This process forces each party to focus on its case as well as that of its opponent. The parties may use expert witnesses on various technical issues. The parties should agree in the lease to:
choose select *Tip: When considering whether to provide for arbitration in a lease, lessors should choose a law favorable to lessors on key issues, including statutes of limitations and other procedural and substantive issues that may arise during arbitration. Choose from many arbitration bodies including the London Court of International Arbitration, the International Chamber of Commerce ("ICC") International Court of Arbitration in Paris, and the American Arbitration Association. Each of these organizations will provide arbitrators for a fee, transmit arbitration filings among the parties, and finalize and "publish" an award. Their fees vary and are largely predicated upon the number of arbitrators involved and the size of the dispute.Selection of the arbitrators by the parties is critical. Usually each party will select an arbitrator, while the previously selected arbitrators will select the third arbitrator. *Tip : The arbitrators do not have to be legally trained but usually have experience related to the particulars of the arbitration and/or industry practices.The arbitrator(s) will either decide the dispute upon the written presentations of the parties, relevant documents, and written testimony of the witnesses, or may conduct an oral hearing. The testimony at an oral hearing should be transcribed and the witnesses sworn. The arbitrators will determine whether or not to admit documents and demonstrative exhibits during the hearing in light of objections from the non-moving party. Once the hearing is complete and the arbitration pleadings, documents and testimony are accepted, the arbitrators will issue a decision (award) stating the reasons and legal basis for the award. They may award the winning party legal fees and costs or require each party to bear its own costs and fees. The award should not be made public, and the parties usually seek to protect its confidentiality. Once the arbitration award is final, it may be enforced in a federal or state court in the United States or in a foreign country that, by treaty, recognizes the arbitral award. The United States Federal Arbitration Act only permits the overturning of an arbitral award in limited circumstances, for example, misconduct or fraud of an arbitrator. Should You Choose To Litigate? Lessors often prefer to litigate a commercial dispute in state or federal court rather than resort to arbitration to obtain the finality of a state or federal court judgment with the knowledge that it is appealable for misapplication of the law. In addition, the litigation rules permit the parties to take advantage of broad federal and state discovery rules backed by the subpoena power of the courts. The parties may rely on various treaties to conduct discovery in foreign countries, including depositions. Again, as in the arbitration context, the choice of law and forum selection provisions are critical. *Tip : In some cases, a particular state or federal forum may favor entities incorporated in or doing business in that jurisdiction.Another advantage of civil litigation is the use of motions to dismiss and for summary judgment to narrow issues or determine the dispute without a trial. Courts frequently assign magistrate judges and special masters to resolve discovery disputes and technical issues related to arcane industry or scientific points. Finally, the parties can elect to use or waive jury trials for most civil disputes that do not involve questions of equity. *Warning : Though a jury may understand the commercial dispute and award appropriate damages, lessors should carefully analyze whether in an international case the issues presented will be too complex or the jury may tend to have a bias against one side or the other in the case.Experts on industry practices or damages issues would also be helpful to the jury and court in determining liability and what damages, if any, to award. Parties to a leasing arrangement should carefully balance the pros and cons of whether to arbitrate or litigate a commercial dispute involving assets outside the United States. Not every possible dispute can be foreseen when counsel elects whether to provide for arbitration in an agreement. Recently, many multinational corporations have elected to arbitrate their disputes rather than subject themselves to the vagaries of foreign legal systems or the sometimes glacial pace of the state and federal courts in the United States. In any case, where a lease involves power plants or other significant leased assets, the parties should, at the inception of documentation, fully evaluate the multiple factors involved in international disputes and agree in writing whether they will litigate or arbitrate those disputes. Thanks to Kenneth (Drew) Grigg, a Partner in our Litigation and Dispute Resolution practice group for contributing this article to BLN.
4. BLN Case & Comment: Liquidated Damages in Aircraft Lease Held Unenforceable - AAR International v. Vacances Helades S.A. After enduring years of litigation arising out of defaults of Boeing 737 aircraft lease, the lessor, AAR International, Inc. (AAR), received more bad news. The U.S. District Court for the Northern District of Illinois, applying Illinois law, struck down the lessor’s liquidated damages clause in the aircraft lease. See: AAR International, Incorporated v. Nimelias Enterprises S.A., Vacances Heliades S.A. and Princess Airlines S.A., 2004 WL 2966659 (N.D. Ill.), No. 99 C 8090 (Dec. 1, 2004)FACTS: In May of 1998, AAR entered into an Aircraft Lease Agreement with Vacances Heliades S.A. (VH) for a term of 96 months covering a Boeing 737-3Q8 aircraft at a base rent of $275,000 per month. VH subleased the plane to Nimelias Enterprises S.A. (NE), which sub-subleased it to Princess Airlines. VH and NE assigned to AAR their rights under the sublease and sub-sublease, respectively. For detailed facts of the long chain of cases, see the April 2001 Decision and a more detailed rendition of the facts of this case, at: 302 F.Supp.2d 869 (N.D. Ill. 2004). VH, as lessee, allegedly defaulted under the lease in 1998 and AAR terminated the lease in September 1999. The following liquidated damages provision of the lease (quoted in part here) created BLN’s subject issue in this case:
As lessor, AAR repossessed the aircraft before the end of the original base term of the lease and apparently reduced the lessee obligations by rent it obtained from third parties by re-leasing the aircraft. The lessee argued that the lessor’s liquidated damages clause in the lease was unenforceable because it did not credit residual value for the aircraft and doubled up actual and liquidated damages. AAR argued that it gave VH credit for rents it received from the aircraft. *Term to Know: "Liquidated damages" refers to a fixed sum paid in damages for a loss or liability when two tests are met: (1) the fixed amount of damages represents a reasonable forecast of just compensation for the harm caused by a breach of contract, and (2) the value of the harm caused by such breach is impossible or very difficult to estimate accurately. See: Pima Savings & Loan Ass’n v. Rampello, 168 Ariz. at 300, 812 P.2d at 1118; Larson-Hegstrom & Associates, Inc. v. Jeffries, 145 Ariz. 329, 701 P.2d 587 (App.1985). Under Section 2A-504 of the Uniform Commercial Code, liquidated damages must be calculated by a formula that produces a fixed damage amount that is reasonable in light of the then anticipated harm caused by the default or other act or omission of the lessee.ISSUE: Can AAR recover both actual damages and liquidated damages caused by VH’s breach of the lease under Illinois law?OUTCOME: No. The court struck down the liquidated damages clause as an unenforceable penalty.LAW: The court stated that:
*Comment: It is not clear to me how the court justified the doubling up of damages when the lessor apparently credited the lessee with rents derived from efforts to mitigate damages. The accrued rents and incidental damages prior to termination should not result in double payments to the lessor depending on the calculation dates of the liquidated damages. However, if AAR received or demanded both discounted rent plus liquidated damages that included rent over the balance of the lease term, the court may have a good point that AAR received double rent. Nonetheless, this case sends shocks through a body of established law and practice in leasing. It directs lessors to write damage clauses, at least in Illinois, so that the lessors explicitly credit the lessee for the residual value of the repossessed aircraft and any rent recovered from efforts to mitigate damages. Such provisions may be worth considering in any case to avoid similar challenges to liquidated damages clauses. The construct for calculating damages under Section 2A-527 and Section 2A-528 (for remedies in leases) may help draft enforceable damages clauses in Illinois. Thanks to Scott Stein, a senior lawyer from RBS Lombard (a member of The Royal Bank of Scotland Group), for providing this article. Scott is a member of the Equipment Leasing Associate Legal Committee that recently distributed this to the ELA Legal Committee (of which I am a member).
5. Leasing 101: What Is An "Indemnity Agreement"? When lenders and lessors enter loan or lease documents, they fully expect their borrowers and lessees to indemnify them in a loan and/or security agreement or in a lease. In Ethyl Corporation v. Daniel Construction Company, 725 S.W.2d 705 at 709 (Texas Sup. Ct. 1987) the court defined an indemnity agreement as a "collateral contract or assurance, by which one person engages to secure another against an anticipated loss or to prevent him from … the legal consequences of an act or forbearance on the part of one of the parties or of some third person." See: Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex. Sup. Ct. 1993). In other words, an indemnity agreement is a promise by one party, called the indemnitor, to safeguard or hold the protected party, called the indemnitee, harmless against either existing and/or future loss, damage, expense or injury liability. See: Russell v. Lemons, 205 S.W.2d 629, 631 (Tex. Civ. App. – Amarillo 1947, writ ref’d n.r.e.). *Warning: Lessees or borrowers who enter indemnity agreements may challenge their enforceability. As a result of a successful challenge, lenders or lessors may not receive anticipated protection for risks they face in their transactions. In legal opinions law firms may limit or refuse to provide opinions that courts will enforce an indemnity agreement. They take this stance because of the difficulty of assuring that the courts will approve the form, effect and scope of an indemnity agreement.Indemnity agreements protect against a wide range of risks. For example, an indemnity may cover the indemnitee for personal injury judgments caused by equipment to violations of intellectual property rights. But this protection is not unlimited. For example, in the Ethyl case, the Texas Supreme Court refused to uphold an indemnity agreement containing protections for the indemnitee against its own negligence. Instead, the court ruled that it would adopt the express negligence doctrine. Under the express negligence doctrine, parties seeking to indemnify the indemnitee from the consequences of the indemnitee’s own negligence must express that intent in clear and specific terms in the contract. Ethyl at 709. *Tip: To increase the chance that your indemnity agreements will be enforced, evaluate the following steps: (1) check your state laws closely; (2) consider making the entire indemnity provision conspicuous (as defined in Section 1-201 of the Uniform Commercial Code); (3) place the entire indemnity in an obvious place in your lease, loan, security or other agreement or in a separate agreement (common for tax and environmental indemnity agreements); (4) ask the indemnitor to initial a separate provision in your contract (in addition to the signing of the agreement) or place the indemnity against the indemnitee’s negligence next to the signature blocks; (5) state expressly that the indemnity agreement covers the negligence of the party indemnified; and (6) leave no doubt to the scope of the indemnity.Consult knowledgeable counsel about the laws governing your contract to take your best shot at making the indemnity agreement work for you as written.
6. About Patton Boggs LLP and My Law Practice; Recent Publications; Upcoming Speeches About Patton Boggs LLP and My Law Practice I am a member of the Patton Boggs LLP Business Transactions Group in our Dallas office. Patton Boggs LLP is a law firm of more than 400 lawyers located in five offices in the United States and internationally in Doha, Qatar. The firm has extensive capabilities in over 50 distinct areas of legal practice that include leasing, secured transactions, personal property financing, corporate finance, syndications, power project regulatory, development and finance disciplines, mezzanine financing, bankruptcy, real estate, public policy, litigation, intellectual property and technology law, and much more. The leasing and secured transaction practices regularly involve the buying, selling, financing and leasing of real and personal property of all kinds, including business aircraft, energy, facility, production, power plant, technology and health care assets. We also structure, negotiate and close secured transactions of all kinds, securitizations, tax-exempt and federal leasing arrangements, and corporate and portfolio acquisitions, among a full range of financing and acquisition transactions. Despite the improving economy, we continue to assist our clients with troubled deals and bankruptcies, including repossessions, lift stay actions, true lease contests, deficiency litigation, workouts and forbearance arrangements. If I, or any other lawyer at Patton Boggs LLP can help you with your legal or business challenges, feel free to call me at (214) 758-1545 or e-mail me at dmayer@pattonboggs.com for information about any of these areas or the many others available at Patton Boggs LLP, or to discuss anything I have written in Business Leasing News. We welcome the opportunity to build a relationship with you!Recent Publications Here are two feature articles published last month by David G. Mayer:Off Balance Sheet Leasing: Is the End in Sight?, The Bright Side of Big Deficits, Upcoming Speeches On Monday, March 14, 2005, I will speak at a Legal Symposium on Equipment Leasing Risks, Rewards and Strategies at the Las Vegas Convention Center, sponsored by the National Stone, Sand & Gravel Association. On Monday, March 21, 2005, I will lead a panel at a special breakfast briefing at Patton Boggs LLP in our Dallas office, entitled The New Era of Business Aviation. We will discuss the business and legal impact of the forthcoming Cape Town Convention and related Aircraft Protocol, the New Fractional Share Rules, use of special purpose entities to own aircraft and increased DOT/FAA Regulatory Enforcement Actions against owners and operators. This event will be by invitation only. See Founder’s Message below for more on this event. On Sunday, May 15, 2005, Bob Downey of Caterpillar Financial Services Corporation and I will speak on Leasing to State and Federal Government: A Primer in Specialized Markets, at the 2005 Legal Forum sponsored by the Equipment Leasing Association, at the Loew’s Miami Beach Hotel, Miami, Florida. On Tuesday, May 17, 2005, Stephen T. Whelan of Thacher Profitt & Wood, LLC, and I will be conducting an interactive "Breakout Session" on Complex Transactions. Steve will address credit support issues in securitizations and I will talk about the fundamentals of The Cape Town Convention and related Aircraft Protocol. We will present at the 2005 Legal Forum sponsored by the Equipment Leasing Association, at the Lowe's Miami Beach Hotel, Miami, Florida.
A Message From the Founder, David G. Mayer Former Senior Government Officials Speak at March 21 Business Aviation Briefing at Patton Boggs I am delighted to announce a special program on business aviation to be held at the Dallas office of Patton Boggs LLP on Monday, March 21, 2005, 8:30 a.m. - 2:00 p.m., entitled The New Era of Business Aviation. We will present a unique line up of speakers from Patton Boggs LLP. Serving as a speaker and moderator, I will join my esteemed colleagues: , former Secretary of Transportation (DOT) in the Clinton Administration;We will focus on how to make money and avoid legal entanglement under the forthcoming Cape Town Convention and the new Subpart K fractional ownership rules. We will explain and offer you ideas on how to cope with the increased level of enforcement actions by the DOT regarding operators, charter services and owners of business aircraft. We will also review some of the regulatory and structuring issues for using limited liability companies to own business aircraft. In the tax area, we will update you on what’s left of bonus depreciation and the new tax rules for executives who use company aircraft for personal reasons. Finally, we will pose the question: What can the TSA do to you and your aircraft? Steve will answer by taking a realistic look at the TSA’s power’s and practices in the aftermath of 9-11. You may be surprised at his answers. This event will be by invitation only with limited seating. However, if you are a BLN subscriber and would like to attend, please request registration by submitting your contact information to dallasrsvp@pattonboggs.com. We will notify you by e-mail when our registration list is completed to confirm your registration status. This special event will touch some vital issues in a growing business aviation market. See: Dynamic Growth Projected for Business Aviation, Business Leasing News (Dec. 2004). I am proud to be a part of this panel. Please let me know if you would like to join us.Thanks to the BLN Staff I extend special thanks to BLN’s editors at Patton Boggs LLP for their comments on this edition, J. Atwood Jeter, a real estate and wind power associate, Margaret Anderson, Adrian Nicole McCoy and the rest of our great BLN staff, as well as our primary web site review partner, Jeff Turner. The technical team, consisting in part of George Barber and Winston Jackson, provide you the easy-to-use e-mail navigation and artistic appearance of BLN. Claire Campbell, our Chief Librarian in Dallas, provides research for BLN.All the best, David David G. Mayer Founder Business Leasing News Patton Boggs LLP 2001 Ross Avenue Suite 3000 Dallas, Texas 75201 (214) 758-1545 (phone) (214) 758-1550 (fax) E-Mail: dmayer@pattonboggs.com © David G. Mayer 2005 NOTE: You may receive BLN from other people, which often occurs. To SUBSCRIBE, change your address or to change your e-mail format, simply click here. To UNSUBSCRIBE, click here. To correspond with BLN, send your message to bln@pattonboggs.com. Thanks. The "For Dummies" part of my book, Business Leasing For Dummies (BLFD)®, is a registered trademark of Wiley Publishing, Inc.
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