BUSINESS LEASING NEWS
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BUSINESS LEASING NEWS |
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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 supply of books is nearly gone, so if you want to find a copy, please search the web today! Thanks for buying my book for two great years. I appreciate all your kind and positive comments on BLFD. This e-newsletter will be timely, informative and concise with supporting research. Please contact Business Leasing News (BLN) to provide us with your feedback. Thanks for taking your valuable time to read this newsletter. You will find that BLN does more for you than just report the news. |
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1. The UniCredito Decision: Agent Banks Avert Liability in Enron Syndicated LoanA recent court decision demonstrates that lending banks must take a “buyer beware” approach when entering syndicated loan transactions. These lenders generally cannot expect to hold agent banks liable for the lending bank’s failure to conduct adequate independent due diligence on the borrower’s creditworthiness or intentions with respect to the use of borrowed funds. The importance of these points was underscored by a recent Enron-related case titled, UniCredito Italiano SpA v. J.P. Morgan Chase & Co. et. al, No. 02 Civ. 5328 (LTS)(JCF), SDNY, 2003 U.S. Dist. LEXIS 18262, October 10, 2003 (the “Decision”). In this case, Milan-based UniCredito Italiano, SpA, one of Italy's largest lenders, and Warsaw, Poland-based, Bank Polska Kasa Opieki SA (the “Plaintiffs”), sued J.P. Morgan Chase and Citigroup, Inc. (the “Defendants”) in connection with loans the Plaintiffs made to Enron in syndicated loan facilities administered by the Defendants. Background: The Role of Agents and Their Agreements The Plaintiffs alleged that the Defendants, acting as “Co-Administrative Agents” and “Paying Agents” of these facilities, profited at their expense from certain off-balance partnerships created by Enron. The Plaintiffs claim the Defendants accomplished this result by inducing the Plaintiffs to extend credit to Enron based on the Defendants’ fraud, misrepresentation, negligent misrepresentation and fraudulent concealment of covenant and other loan agreement violations. According to the Court, the Plaintiffs “knew that Enron’s disclosures with respect to the LJM partnerships were materially misleading, inaccurate, and inadequate, and they withheld knowledge from the Plaintiffs.” Enron allegedly disguised debt as advance payments for oil in trading transactions, called “prepays,” arranged by the Defendants or their affiliates. By characterizing the transactions as commodity trades, Enron kept the debt off its balance sheet. As a result, Enron allegedly hid “funded debt from their equity analysts.” See Page 4 of the Decision. The credit facility agreement contained several provisions that stated that the Defendants did not have a “fiduciary relationship with respect to any Bank” or “any duty to inquire as to the performance or observance of any of the terms, covenants or conditions of any Loan Document.” Further, the agreement provided that: “Each Bank …will, independently and without reliance upon the Paying Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions….” See Page 5 of the Decision. Enron agreed to furnish to each bank “such other information respecting the condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries as any Bank through Paying Agent may … request.” See Page 6 of the Decision. In short, the agreements stated that the Plaintiffs should not rely on the Defendants as a substitute for the Plaintiff’s own due diligence to make their credit decisions about Enron. *Terms to Know: The transaction structure in this case is critical both to the due diligence issues and the outcome of the case. The Plaintiffs extended loans through syndicated credit facilities, which means that multiple banks, including the Plaintiffs, agreed to extend credit directly to Enron. Contrast that transaction to a loan participation, in which one or more lenders transfer to other banks portions of the original lender’s pre-existing loan commitments. See: Page 12 and Banco Espanol de Credito v. Security Pacific National Bank, 763 F. Supp. 36, 43 n. 5 (S.D.N.Y. 1991). The Outcome - Agents Win and Lose In UniCredito, the Court dismissed most of the allegations by the Plaintiffs. Civil conspiracy and unjust enrichment claims remain subject to further proceedings. The claims of the Plaintiffs otherwise failed to state a cause of action to the extent the Plaintiffs based their claims on misrepresentations or omissions by the Defendants concerning Enron’s financial condition. The Court sanctioned the effectiveness of standard credit agreement non-reliance provisions and related disclaimers, including those clauses in which the lenders represented that they had developed their own credit analyses and made independent decisions to enter into the credit agreement. *Tip: As a lender and/or agent in syndicated loan facilities, you and your counsel should fully understand the UniCredito decision to help evaluate your approach to existing transactions and future syndicated loan transactions. Consider these steps in your syndicated loan deals: (1) Broadly define the type and scope of your independent due diligence. (2) Do not rely on security, administrative or other bank agents as the only basis on which you enter a transaction. (3) Conduct this work at the front end of the loan and as necessary before each advance. As an agent in these deals, the UniCredito decision may effectively create a form for your lawyers to use when drafting appropriate non-reliance and disclaimer provisions because the Court sets out the protective language in the agreements. By drafting your agreements correctly in accordance with this decision, you may derive some comfort about barring potential liability in your role as agent (with exceptions of course). While UniCredito analyzes certain issues in syndicated loans, it also clearly highlights the differences in participation transactions. Consequently, lenders and their counsel should carefully evaluate the appropriate structure of each transaction. Should a lender choose a syndication versus a participation transaction to build new business volume? This question represents a small part of the issues that financial institutions face in transactions today. Broadening Role of Due Diligence The Enron debacle has generally forced financial institutions to broaden their due diligence efforts far beyond syndicated loan transactions. According to a recent article in The New York Times, a “new rigor in structured finance” business has emerged. Financial institutions now increasingly strive to understand a borrower’s real intentions for loan money and to evaluate the potential effect of transactions on their reputation. See: After Enron, Bankers Weigh Clients’ Motives, The New York Times, September 19, 2003. Although structured finance comprises a fraction of all financing, banks have begun to apply tighter controls and enhanced due diligence in their transactions. For example, banks increasingly:
*Tip: Banks and investment banks have incurred significant liability as a result of the Enron matters in which they participated. It behooves financial institutions to implement higher standards of due diligence when evaluating structured finance transactions. This effort may limit the potential for liability, shareholder accountability and regulatory scrutiny. Due diligence teams should incorporate appropriate questions in their due diligence reviews to evaluate the foregoing points. Enron’s alleged wrongdoing continues to reverberate in the financial services markets and implicate more parties in various roles in Enron transactions. As a result, due diligence has become a vital part of completing structured finance and syndicated loan transactions as a necessary means by which each party protects its vital interests. I would like to thank Rafael Anchia at Patton Boggs LLP for his assistance with this article. 2. GDP Growth Spurt in the Third Quarter May Jump Start LeasingGiving a shot in the arm to business confidence, the gross domestic product (GDP) grew by 7.2 percent in the third quarter, topping growth records since the first quarter of 1984. Will leasing get a boost as a result of such impressive growth? *Term to Know: The GDP generally refers to the total output of goods and services produced by labor and property located in the United States. In other words, GDP is the total value of goods and services produced over a certain period of time by people working in the United States. Leasing Pattern: Lagging a Slow-Down and the Rise in the Economy In my experience, business activity in the leasing industry seems to lag behind the drop and rise in the economy. Generally, we become accustomed in the U.S. to consumers leading the charge to recovery. Leasing just doesn’t move that fast. This new economic report could make a difference as business investment grew at an 11 percent rate annually, the fastest clip since early 2000. See: Economy Turned In Its Best Quarter in Nearly 2 Decades, The Wall Street Journal, (S.W. Ed.), October 31, 2003, Section A:2, Col. 6. Optimistic Views of the Economy The Business Roundtable, an association of CEOs led by Boeing Chairman, Phil Condit, earlier this month reported that 23 percent of its executives expect to increase capital spending this year, while only 12 percent plan to cut capital spending. While torrents of investments should not be expected, almost all of the executives in the Business Roundtable exuded optimism about the economy. In international markets, exports grew by 9.3 percent, suggesting a global recovery and increased potential for cross-border investment. See: So Much for Recession, The Wall Street Journal, (S.W. Ed.), October 31, 2003, Section A:12, Col. 1. Even before the federal government issued the GDP report, CapitalSource Finance LLC and The Gallup Organization published a much more favorable survey of middle market companies. The survey included 500 top financial executives, representing 57,000 companies and 3 million employees. The survey concludes, in part, that the companies placed a high priority on financing equipment (78 percent) and technology (70 percent). Of these companies, 46 percent said they would consider leasing and equipment financing to make the investment. See: Ready to GO: 72% of Mid-Sized Companies Will Increase Capital Spending in Next 12 Months, a CapitalSource Finance/Gallup Poll Finds (October 7, 2003). *Opportunity Point: Which types of equipment could first show potential for the leasing industry? While I would not venture to predict recovery by equipment type, business investment seems to be increasing its activity in the following areas that may help leasing and equipment financing grow significantly:
It’s hard to determine whether leasing will follow old habits. If it does, business volume will grow slowly and unevenly next year with some business segments producing higher investments this year. At the moment, the recent GDP report suggests a reason for optimism as business confidence, if not leasing volume, stands to make significant gains after several tough years. 3. Equity Sponsors and Lenders Strike a Balance in WorkoutsDo you know a troubled company facing loan defaults and operational challenges? Have markets for the company’s products and services diminished or moved away from the company, depressing revenue or opportunity while increasing its debt and expenses? Are equity sponsors trying to cope with these challenges with secured lenders breathing down their necks? If you have experienced these situations in your portfolio or have seen them occur in other finance companies, then you may realize a workout of the troubled company often pits equity sponsors against the lenders or even lessors in the search for solutions to stop the downward spiral of a company’s fortunes. Inevitably, a successful workout of this kind of situation requires a balancing of power between the two parties. If properly done, the company, the equity sponsor and the lenders may all survive the crisis and meet their respective objectives. The Genesis of a Crisis The genesis of a company’s crisis depends, of course, on the type of company and its unique circumstances. A company’s downward spiral frequently starts with the failure of its management to recognize the underlying business problems it created or permitted to develop. For example, the crisis may stem from diminished demand for the company’s products and services, increased debt arising from poorly planned or executed acquisitions or the failure of the company to adapt to changing markets in a slow economy. Management may lack the skills to understand the error of their ways or to correct them. Management may even deny or hide elements of the crisis. As seen in recent corporate scandals, some companies have allegedly resorted to cooking the books resulting in various accounting irregularities or making poor judgment about corporate governance. The need for action may not be recognized, or if recognized, the actions may be inadequate to stem the tide of red ink. Finally, the collapse of the organization may ensue with the ultimate outcome being the failure of the business or its recovery efforts. See: Looking for Trouble? The Need for Turnaround Leadership, Fleet Capital – Relationships, Southern Division (Fourth Quarter 2002). Joint Efforts by Equity Sponsors and Lenders By this point in the downward spiral, the equity sponsors should have consulted the company’s lenders. The equity sponsors and their company should have kept the lenders informed to avoid surprises and to identify solutions together. However, each party has its interests to protect. Equity sponsors may have their own reasons to work through company problems before involving more risk adverse lenders. Unlike the lending and growth period in a company’s history, a workout introduces the “special assets” or “workout” groups of the lenders. These groups generally consist of risk managers whose focus differs from the marketing or underwriting teams. The special assets team generally looks for rational plans to exit a troubled transaction or to shift risk to the equity sponsors or other investors, managers or replacement lenders. A risk tolerant equity sponsor, on the other hand, seeks to preserve its investment and control while developing plans that will enable the troubled company to survive or prosper in the future. Neither party can solve the crisis or meet its objectives without balancing the interests of the other parties. In our recent experiences, the equity sponsor often considers the importance of its reputation in its industry and with the lenders involved in the workout. The special assets team, however, may narrowly focus on recovery from the situation at hand as its highest priority, while bearing in mind secondarily the value of the relationship with the equity sponsor. Each party should understand certain aspects of the workout process involving the other to have a shot at recovery. Equity Sponsor Key Workout Points Involving Secured Lenders As equity sponsors cope with their troubled company, they should:
*Tip: As an equity sponsor, if you disagree with the lender tactics, demands, charges or desire for greater control over the company, you have options to strike a balance of power. You can arrange for the company to enter into pre-workout, forbearance of other agreements to gain time to solve the crisis. You should realize that lenders generally ask for compensation and convincing reasons they should cooperate with you. You can use even stronger tools to thwart overzealous lenders. Your weapons include: (i) causing the company to file a petition in bankruptcy (using the automatic stay to slow down an aggressive lender); (ii) commencing litigation that tests rights of action of the lenders; or (iii) alleging lender liability for aggressive acts arising prior to or during a workout. Evaluate these actions carefully before you act. Secured lenders may foreclose on their collateral. The effect may be to wipe out your equity and overcome your efforts to prevent them from recovering their loan balances and costs. For more on “hot buttons” of lenders, see: What Equity Sponsors Should Know When Dealing With Lenders In A Workout, Fleet CapitalEyes (August 2003). Lender Key Workout Points Involving Equity Sponsor Aware that equity sponsors can either assist or obstruct a lender’s workout objectives, lenders should consider the following action steps in connection with troubled company workouts:
*Tip: As the lender, if you elect to foreclose, Revised Article 9 of the Uniform Commercial Code now requires that you act in a commercially reasonable manner and conduct public or private sales in accordance with Section 9-610 and subsequent sections. Follow these rules closely to avoid arguments with your borrower over the method of foreclosure and your rights to deficiencies. If you are willing to provide financing, consider placing conditions on your advances that require the borrower to meet certain objectives before you fund. For example, you may require that your borrower: (i) provide additional collateral or guarantees to support your loan, (ii) pay you fees and other compensation (such as higher interest on the debt) for the increased risk; and (iii) develop a turnaround plan that reexamines all aspects of the enterprise. In any event, when signs of trouble become clear, promptly retain knowledgeable professionals such as turnaround managers, accountants, appraisers and lawyers to work with you and the equity sponsors. Recognize that equity sponsors have tools such as bankruptcy filings and allegations of lender liability that may obstruct or limit your recovery. Lenders and equity sponsors each have ways to manage the rights and expectations of the other party. However, each should bear in mind that by balancing their respective interests and working toward the recovery of the borrower’s business, both parties may achieve a mutually beneficial outcome. 4. Basel II Accord Delayed by Protest of U.S. Financial InstitutionsAlthough chartered for completion this year, U.S. financial institutions derailed the implementation schedule of the Basel II Accord (Accord) until mid-2004. This delay puts in question the proposed implementation date in 2006. The U.S. financial services industry expressed growing criticism about the negative impact of the agreement on the financial health and competitiveness of American banks. Leasing companies share some of the concern. Nonetheless, the Basel Committee has made substantial progress on major issues and completing the Accord. See: Basel II: Significant Progress on Major Issues, Statement by the Bank for International Settlements, dated October 11, 2003. Extensive Comments on the Accord The Basel Committee received over 200 comments on its Third Consultative Paper. For example, the Financial Services Roundtable, an organization representing 100 of the largest financial services companies in the U.S., commented on the Accord. Their comments primarily focused on (1) the minimum capital requirements that must be held by institutions, (2) supervisory review of an institution's capital adequacy and (3) internal assessment process and market discipline through effective disclosure to encourage safe and sound banking practices. Most Controversial Part: Operational Risk The most controversial part of the Accord relates to “operational risk” issues. Operational risk is defined as “the risk of loss resulting from inadequate or failed internal process, people and systems or from external events.” The argument centers on dealing with these issues under the new supervisory concepts (called a “pillar” of the Accord) rather than charging a bank’s capital and increasing bank operations and funding costs. Capital is defined to cover both expected and unexpected losses which, some banks argue, could overstate risk and required capital. A capital charge could increase the cost of leasing and lending transactions. For more on Basel Accord basics, see: U.S. Banks Worry About Impact of Latest Basel Capital Accord, Business Leasing News (June 2003). Accord White Paper From a Leasing Perspective While the Accord is daunting in complexity, the Equipment Leasing and Finance Foundation has published a White Paper that clearly shows how the Accord directly and indirectly affects leasing. It also describes how the Accord works in the three supporting pillars of the Accord: (1) minimum capital requirements, (2) supervisory review, and (3) market discipline. For a summary of the White Paper, see: Basel II Means Big Changes, Equipment Leasing Today, (October 2003). The delay in implementation does not mean that the Accord will not be become effective with respect to internationally active U.S. financial institutions. It also does not mean that the Accord will not have impact on leasing. To illustrate, the Accord may require leasing companies to:
*Warning: To avoid burdensome compliance issues, U.S. banks and leasing companies should immediately direct their appropriate resources to understanding and developing methods to comply with the Accord as it seems likely to become effective in the not too distant future. 5. Boeing 767 Tanker Lease Program Slimmed DownJohn Warner (R. - Va.), the chairman of the Senate Armed Services Committee, proposed a greatly reduced program of the controversial federal leases of 100 Boeing 767 refueling tanker aircraft. Warner’s plan calls for leasing 20 aircraft and buying up to 80 aircraft. The Air Force has resisted this cut back in the leasing plan even though leasing allegedly costs more than buying. The Air Force contends that it has no room in its budget to buy the aircraft, and it desperately needs new aircraft for military missions, and needs to replace the 40 year old KC 135 refueling tankers currently in use. See: Air Force Opposes Scaled-Back Tanker Plan, Washingtonpost.com (October 25, 2003). The Changing Tide - Compromise Takes Hold Secretary of Defense Rumsfeld may nonetheless support the reduced plan. Last week, the Pentagon agreed to this compromise. As a result, the Air Force would lease 20 aircraft and purchase 80 aircraft. They would be delivered over nine years instead of six years, an apparent setback for the Air Force. See: Pentagon Sets Compromise on Boeing Tanker-Lease Deal, The Wall Street Journal, (S.W. Ed.), November 7, 2003, Section A:2, Col. 3. CBO Questions Lease Versus Installment Sale Although characterized as a leasing program, the Congressional Budget Office (CBO) argues that the proposed form of lease constitutes an installment sale and does not qualify as an off-budget lease under federal accounting rules. See: Rules Circumvented on Huge Boeing Defense Contract. Similarly, the CBO presented this point to Chairman Warner:
CBO makes the argument that the control by the federal government of the special purpose entity that would own the aircraft would prevent the deal from being a lease; and, in any event, the lease costs exceeds the purchase costs. *Tip: This accounting concern resembles the current off-balance sheet issues arising from the various accounting scandals in the last two years in corporate America. This accounting challenge demonstrates the importance of carefully structuring transactions to obtain desired operating lease treatment in both the public and private sectors. Although the Boeing tanker project remains controversial, it may be headed to the White House soon for signature by the President. Even if the Air Force leases only 20 Boeing 767 aircraft, the case for federal government to lease crucial assets will end on a high note. 6. Leasing 101: What Is an “Involuntary Bankruptcy”?An involuntary bankruptcy petition is the commencement of a proceeding in a federal bankruptcy court by creditors who elect to force a debtor into a reorganization or liquidation of its assets and liabilities. Creditors may take this action to preserve property, obtain protection of their interests from the court or to establish an orderly priority to property. Here is how an involuntary bankruptcy generally works: Three or more entities (one or more entities if fewer than twelve creditors exist) can file an involuntary bankruptcy petition against a debtor. A debtor has the right to answer the petition similarly to responding to a lawsuit. A debtor may be a guarantor, lessee, borrower or even a lessor. See: 11 U.S.C. Section 303 of the United States Bankruptcy Code (Code). However, the creditors must meet two other requirements to start an involuntary under Chapters 7 or 11 of the Code. See: 11 U.S.C. Section 303(a) and (b).
In other words, three unsecured creditors with undisputed debt can initiate an involuntary filing against a debtor. For example, say three lessors properly repossess leased property from the same lessee and sell the property in a commercially reasonable manner at a loss exceeding $11,625 in total. Assuming the lessee has no bona fide dispute to the lessor’s claim, together the lessors can file an involuntary petition in bankruptcy against the lessee. The entity against which the involuntary petition is filed is then given the opportunity to answer the involuntary filing. Because the filing of an involuntary petition resembles the filing of a lawsuit, the bankruptcy court may only enter an order for relief (that is, start the bankruptcy case) after notice and a hearing. This approach permits the bankruptcy case to proceed if one of two conditions is met. First, the debtor must generally not be paying its debts as they become due (unless subject to a “bona fide dispute”). Second, 120 days prior to the involuntary filing, a trustee, receiver or agent must have been appointed to take charge of the debtor’s property for the purpose of enforcing a lien against that property. See: Sections 303(b), (d) and (h). *Warning: If the bankruptcy court dismisses an involuntary petition, it can impose damages, costs and expenses against the petitioners/lessors in the example (including punitive damages for bad faith involuntary filings). See: Section 303(i). I would like to thank Bruce White, a bankruptcy partner at Patton Boggs LLP for his assistance in commenting on this article. 7. BLN Briefs: New Terrorism Insurance Regulations; Patriot Act Challenges; FASB Fixes QSPEs and VIEs; Corporate Tax Relief AdvancesTreasury Issues Final Regulations on Terrorism Insurance. The Department of the Treasury (Treasury) issued final regulations (68 Fed. Reg. 59,720), effective October 17, 2003, under Title I of the Terrorism Risk Insurance Act of 2002 (Act). Signed by President Bush on November 26, 2002, the Act requires the federal government to reinsure private insurance companies (after certain deductibles and loss sharing) for up to $100 billion per year until the end of 2005. The final rule clarifies the conditions for federal payment and requires insurers to make certain disclosures to policyholders. The rules also incorporate and clarify the requirements that insurers ‘‘make available’’ in their commercial property and casualty policies terrorism risk insurance coverage for insured losses resulting from certified acts of terrorism under the Act. For more information, see Terrorism Insurance Press Release. Patriot Act Faces New Challenges. Despite the threat of terrorism, a group of Senators has proposed legislation that would amend and clarify controversial portions of The USA Patriot Act that became law October 26, 2001 in the aftermath of the September 11 tragedy. Introduced October 2, 2003, the Security and Freedom Ensured Act (SAFE) (S. 1709) imposes limits on wiretaps, search warrants and library records. The Act continues to cause concern about its scope and application in the financial services industry. Although the government has yet to issue regulations focused on leasing companies many lessors have nonetheless made efforts to comply with the broad and complex provisions of the USA Patriot Act. See: Lessors Take Action to Comply With the USA Patriot Act, Business Leasing News, August 2003. FASB Tries Again to Fix QSPEs and VIEs. The Financial Accounting Standards Board (FASB) will apparently try again to issue an acceptable revision of FASB Statement No. 140 (FAS 140). The current “Exposure Draft” covers permitted activities of qualifying special purpose subsidiaries (QSPEs). In part, FAS 140 focuses on how an entity can transfer financial assets to a special purpose entity and isolate the assets from the balance sheet of the transferring entity. Because of heavy comments and complexity of the current Exposure Draft, FASB may issue a re-exposure of its proposed guidance on this subject, which will impact lease and other securitizations. FASB has postponed by one quarter (from Q3 to Q4) compliance with FIN 46 for variable interest entities (VIEs) in which public companies have an interest and existed before February 1, 2003. See: FASB Staff Bulletin FN 46-6. It also intends to issue modifications and clarifications of FIN 46 that would apply in financial statements for the first period ending after December 15, 2003. The 35-page draft contains some new exemptions of certain entities from FIN 46. For more, see: FIN 46 Press Release and Draft Interpretation. *Action Item: The comment period on the final interpretation ends December 1, 2003 if you want to put in your two cents. Corporate Tax Legislation Advances. On October 28, 2003, the House Ways and Means Committee approved international tax reform legislation (H.R. 2896), generally called American Jobs Creation Act of 2003 (Act). If enacted, the Act would repeal the U.S. system of export tax breaks called the extraterritorial income exclusion (ETI). The purpose of the proposed Act is to amend the Internal Revenue Code of 1986 (Code) to remove impediments in the Code and make U.S. manufacturing, service and high-technology businesses, and workers more competitive and productive both in the U.S. and abroad. If enacted, the Act would replace the ETI with rate cuts for domestic manufacturers and smaller corporations. The proposed Act would also provide tax relief for the overseas operations of U.S. multinationals. It would extend 30 percent and 50 percent bonus depreciation for a year (Section 1041 of the Act). 8. Training Offered; Recent PublicationsTraining - Substance the Easy Way! To help improve your business operations, deal processing and risk management, I offer private training seminars tailored to your specific needs at your designated location. My interactive and informative approach relies, in part, on my book, Business Leasing for Dummies (BLFD) ® and subjects I cover in BLN. I customize the format and content for your specific training needs - no canned programs. Feel free to call me at (214) 758-1545 to discuss the possibilities. Recent Publications Besides BLN, I write other articles on leasing and financing topics with a current emphasis on energy, tax and terrorism issues. Check these out:
A Message From the Publisher, David G. MayerHe cracked some off-colored jokes and poked well-deserved fun at lawyers. Ben Stein, who spoke to a general session of the 42nd Annual Convention of the Equipment Leasing Association in San Diego last month, offered an important and emotional message. An economist, humorist and television personality, Stein lamented that he has done many things wrong in his life. Yet for all his self-depreciating comments, Stein has achieved some impressive successes in his career as a presidential speech-writer, economist and lawyer. He has written best selling books and has brought laughter and fun to many audiences. Despite his professed failings, he described at least one thing he did right. He treated his family, and particularly his parents, well. Stein has cared for and devoted himself to his parents and family. With poignant emphasis on his relationship with his father, Stein shared how he was a good and loyal son. So what did he offer the ELA members amidst his jokes? Stein caused us to reflect for a few moments. As a $250 billion a year industry, equipment leasing has faced many obstacles since its inception over 30 years ago. In the last few years, leasing has confronted down markets, legislative turmoil and corporate upheavals affecting every segment of the business. It has craved an economic upturn, complained about low volume and worried about its future. But many of us have done well by leasing and can still do well in the future. What Stein taught us in the fullness of his humor is that we have much to be thankful for in this industry and in our lives. The industry’s members include some of the best and brightest minds in finance, with ample skills and resources to succeed even under difficult conditions. The problems we have faced and may yet see in the future pale in comparison to our successes and our prospects. We have made many friends, competed hard and created value for our organizations and our customers. In short, Stein suggested that to get the most out of life and our work, we should have an attitude of gratitude. Taking his cue, we should be thankful for what this industry has done to enrich our lives, challenge us and provide for our families. As we approach the holiday season, and particularly Thanksgiving this month, perhaps we should take a break, if only from a moment, from worrying about the next deal and the next financial report, and consider Ben Stein’s real message. Have a good November and a wonderful and healthy Thanksgiving. Feedback From You Most months I share comments I receive on Business Leasing News. Here’s a comment I received by e-mail recently: “I greatly admire your newsletter as it is always full of useful and professional information.” At the ELA Annual Convention in San Diego, I spoke to many people about BLN. Here is a sampling of their comments:
As always, thanks for reading my publications and for your feedback. I really appreciated all of your comments at the ELA Annual Convention. Not only did you validate the work we do with BLN, but also encourage us to continue this effort to serve you as well as the leasing and financing industries. About the Web Site of Business Leasing News If you have bookmarked BLN, please change your bookmark to BLN’s address at Patton Boggs LLP: http://www.pattonboggs.com/newsletters/bln. Please stop by and see the BLN web site any time. It offers not only past issues but also some of my speeches and various search tools. About Patton Boggs LLP and My Practice As you may be aware, I am a part of the Patton Boggs LLP Business Transaction Group in the Dallas office. Patton Boggs LLP is a law firm of about 400 lawyers located globally in six locations with extensive capabilities in over fifty areas of legal practice that include leasing, secured transactions, securitizations, syndications, project and mezzanine financing, bankruptcy, public policy, litigation, intellectual property and technology law and much more. The leasing practice regularly involves the buying, selling, financing and leasing real and personal property of all kinds, including aircraft, energy, facility, production, technology and healthcare assets. We also structure, negotiate and close specialized transactions such as vendor and venture leasing programs, tax exempt, state and federal leasing arrangements as well as corporate and portfolio acquisitions, to name of few. Given the state of the economy, we extensively assist our clients with troubled deals and bankruptcies, including repossessions, lift stay actions, deficiency litigation, workouts and forbearance agreements. Please 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. I welcome the opportunity to build a relationship with you! Thanks to the BLN Staff I extend a special thank you to my editors at Patton Boggs LLP for their comments on this edition, Adrian Nicole McCoy, Sheila McCoy, Steve Reagan and our web site review partner, Jeff Turner. The technical team, consisting in part of George Barber and Winston Jackson, continue to provide talented skills and support to BLN. All the best, David David G. Mayer The "For Dummies" part of my book,
Business Leasing For Dummies (BLFD)®, is a registered trademark
of Wiley Publishing,
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