JANUARY 2004

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Welcome to the January 2004 "Second Anniversary" edition of "Business Leasing News." 

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 sold out, so if you want to find a copy, please search the web today! Thanks for buying my book for two great years.

This e-newsletter will be offer timely, concise information and analysis backed by supporting research. Please contact Business Leasing News (BLN) to provide us with your feedback. Thanks for taking your valuable time to read BLN-which does more than just report the news. 

IN THIS ISSUE:

1. Business Jet Market Prepares for Takeoff to Sustained Growth

After nearly two years of decline and trauma, business aircraft orders, deliveries and financing may be preparing for take off in 2004. If the economy continues its growth for the next four to six quarters, business aviation may also achieve sustained growth in 2006-and beyond. 

The Long-Term Outlook

Over the next ten years, the outlook for business aviation is bright. Honeywell Aerospace, perhaps the world's leading expert in business aviation forecasting, predicts customers will purchase more than 7,700 jets valued at over $115 billion dollars during the period 2003 through 2013. See: Honeywell Aircraft Production Forecast, World Aircraft Sales Magazine, page 45 (November 2003) (called, the "Honeywell Report"). Teal Group, another well-known forecaster in business aviation, stated it believes that as of July 2003 manufacturers will produce 6,075 business jets worth $89 billion over approximately the same period. See: Business Jet Market Overview, Part I (July 2003) Teal Group, World Aircraft Sales Magazine, page 28 (July 2003) (called the "Teal Report"). 

A Few Tough Years for Business Aviation

Business aviation may have great prospects, but it has recently faced a few tough years. After reaching a peak in sales and deliveries in 2001, new deliveries suffered only a modest decline of about 105 units in 2002, or about 10 percent compared to 2001. These declines stemmed from postponement or deferral of new orders attributable to the war in Iraq and the uncertainty of the U.S. economy coupled with technical delays in new aircraft certification. See: Honeywell Report at page 46. In 2003, the market entered a steep decline after the seeming nose dive in business activity for lessors and lenders in 2002. Aviation Data Service, Inc. (AvData) expects deliveries to drop10 to 15 percent more in 2003 from 2002 levels.  Business jet manufacturers expect to end 2003 with no more than 450-500 deliveries of new aircraft with the same results in 2004, a 26-33 percent drop from 2002. A modest upturn is expected in 2005. See: Honeywell and Other Analysts Posit Gradual Market Upturn, Aviation Week & Space Technology. 10/06/2003, page 36.

Declining markets not only affected whole aircraft in business aviation but also slowed sales in fractional programs. These programs have consequently gained pricing power in negotiations with manufacturers, cutting into profitability of manufacturers, as manufacturers aggressively marketed their products to maintain back orders and sales volumes. 

The Used Business Aircraft Market

The forthcoming period of predicted growth in business aviation does not consider the current market for used aircraft. Until recently, approximately 2000 used jets were available for sale, double the number from January 2000. The average price of a sale has been about $4.1 million, in comparison to a market peak of $6.3 million in May 2001. Of all business jets, about 17 percent are offered for sale. See: Boeing Capital Presentation, by Steve Williamson, 2003 ELA Annual Convention (October 13, 2003). 

Inventories of used aircraft have increased and sold slowly, if at all. Prices have plummeted for used aircraft, but seem to be bottoming out with larger jets such as the Gulfstream V. These aircraft are starting to sell as the market recognizes the end of price declines have probably occurred. In the last quarter of 2003, many industry observers-official and unofficial-report that sales have begun to increase generally for larger cabin aircraft of less than ten years in age. In addition, buying and leasing activity has increased for existing inventories of smaller cabin aircraft of less than ten years of age that offer advanced avionics and technology.

Investment in the Future-Despite Difficult Times

Despite the challenging markets for business aviation, including softening order rates and the declining number of deliveries in the past two years, manufacturers have continued to invest in the future. See: Honeywell Report at page 46. The expectation that aircraft purchases will resume their growth has remained steady since 2001. The key elements of the expectations rest on the (1) high level of interest in new models of aircraft, which represent 40 percent of the purchases expected in the next five years, (2) projected economic growth over the next five years, and (3) increasing role of fractional operations. See: Honeywell Report at page 47. The importance of fractional share programs in business aviation sales cannot be overstated. Fractional companies today account for 15-18 percent of new business jet deliveries. Their orders represent 40 percent of the stated industry backlog. Fractionals control seven percent of the worldwide business jet fleet of 12,859 aircraft. Teal Report at pages 30 and 34. Honeywell expects this percentage to rise to 20 percent by 2012. See: Honeywell Report at page 48. For a good summary of key elements of the Honeywell Report, see: Honeywell Outlook, NBAA 2003 Show News. 

*Opportunity Point: With the growth in fractional programs, lessors and lenders may have increasing demand for financing fractional shares, although fractional share owners often purchase shares for cash.

Risk Factors for the Market

Legitimate issues exist that may offset the recovery of business aviation. One key issue is whether the world economy continues to recover and grow and, if so, whether it will create the earnings and wealth that encourages the acquisition of business aircraft. Secondly, security issues for users of corporate aircraft have never been more important with terrorism dominating international news. The U.S. is by no means immune from these risks as 9-11 taught us. Arguably, the security concerns should propel business aircraft use because of the ability of operators to control passengers and access to the aircraft. Third, manufacturers must execute their plans to bring new products to market to fill the back orders and attract new orders. 

Despite these downside issues, the business aviation market has begun to shake free of the doldrums as the market recognizes the increasing value and desirability of business aviation. Given the developing trends and potential for business aviation over the next decade, participants in this business, including lessors, lenders and purchasers, may wish to implement strategies now that will enable them to catch the market's next flight. 

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2. FASB Delays Consolidation Rules-Again

FASB Interpretation No. 46, "Consolidation of Variable Interest Entities," generally known as FIN 46, creates "Enron-inspired" rules on consolidation of off-balance sheet entities. Criticized for complexity and lack of clarity, the Financial Accounting Standards Board (FASB) "re-exposed" FIN 46 on December 24, 2003 to alter the original version issued about a year ago. The latest and greatest version of these rules is approximately 79 pages in length and will be called FIN 46 (Revised 12/2003), or FIN 46[R]. For more information on FIN 46[R], see: FIN 46[R] Press Release and Summary of December 10, 2003 FASB Decisions.

*Remember: FASB has stated that the objective of FIN 46[R] is not to restrict the use of variable interest entities (VIEs) but to improve financial reporting by enterprises involved with VIEs. The revised Interpretation is complex but may enable you to make more sense of how to record and report on VIEs. When structuring new transactions or making changes in existing ones, consider the impact of FIN 46[R]. 

Considering the problems with FIN 46 and the timing of the release of FIN 46[R], FASB has extended the effective dates based on differing traits of VIEs by various types of parent enterprises. Special effective date provisions apply to enterprises that have fully or partially applied FIN 46 prior to issuance of the revised Interpretation. Otherwise, the application of Interpretation FIN 46[R] is required in financial statements of public entities that have interests in special-purpose entities (SPEs) for periods ending after December 15, 2003. Public companies that are not small businesses will generally have until March 31, 2004 to abide by FIN 46[R]. 

*Tip: Check the effective date provisions carefully when you apply FIN 46[R] to your enterprise. The description above includes only a portion of the relevant information. Look for a summary of the relevant parts of FIN 46[R] in the February edition of BLN.

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3. Terrorism Issues Become a Routine Part of Due Diligence, Risk Management

Suppose your company owns and leases a commercial bank building, a water treatment facility, a chemical production facility or a combined cycle cogeneration plant located in or within ten miles of a major city. Assume that you continue to do these deals as a normal part of your business. You then learn that the Homeland Security Department has raised the terrorism advisory level to "Orange," the highest level since 9-11, as it did in late December of 2003. What, if anything, do you do?

Response to Terror Advisories

Do you sit back and assume you have no worries-thinking your lessee alone carries the burden and risk of any terrorism event affecting your leased property? Do you dig out your lease documents to determine what insurance coverage you have if your leased property becomes the next "soft target" of terrorism during such an advisory or at any other time? Do you simply ignore the terrorism risk as so remote that you really can't foresee any event affecting your leased property? See: Training against terrorism uses malls, by Shaun Waterman, United Press International (July 18, 2003). 

Expanded Scope of Risk Management

If you pondered or answered one of these questions, you have engaged in an increasingly important aspect of today's risk management involving real estate and facilities under lease or loan financing. Owner/lessors and lenders can no longer ignore terrorism advisory levels as non-events. Rather, it is prudent, if not essential, for lessors and lenders to broaden the scope of risk management to include terrorism analysis and planning as a routine part of structuring transactions and purchasing, leasing, financing, operating, insuring and protecting real estate and facility investments. 

Courts May Find Owner/Lessors Liable

In a current lawsuit related to the 9-11 attacks, the court considered whether to dismiss claims against lessors, owners and airlines by certain families and businesses (plaintiffs) that experienced losses on 9-11. The Court refused to dismiss the claims because it could not conclude that the defendants could not foresee the risk of harm (that is, if harm or loss is foreseeable, it is possible that the defendants could be found liable to the plaintiffs for negligence). As a lessor or owner, can you say without any doubt that no one can reasonably foresee that an act of terrorism will occur at or near one of your leased properties?

*Tip: As a lessor and lender, do not assume that only lessees or borrowers shoulder the terrorism risk. Take appropriate legal precautions to protect your investments and interests. For example, as a lessor you should normally have the right, but not the obligation, to inspect facilities or real estate to audit for terrorism risk and other reasons. Do not readily agree to limit these inspections because the lessee wants to avoid your potential interruption of its operations, especially where terrorism risk or defaults exist. Require your lessees to retain acceptable experts, at your request, to assure that your lessees implement prudent risk management, if not best industry practices, to mitigate terrorism risk and to protect your interests. For more information, please contact me to discuss risk management provisions to insert in your lease and loan documents, as well as crisis management methodologies to cope with a terrorism event.

Fundamental Scope of Due Diligence and Risk Management 

Despite elevated levels of terrorism advisories, terrorism risk should be kept in perspective. You should address this issue, like it or not, from the inception of a transaction. It constitutes one area of due diligence before a closing, and risk management after a closing, often (but not exclusively) in real estate and facility transactions. Broadly described, each of the following areas deserves close consideration in each such transaction:

• Economic Risk. Focus primarily overall return including after-tax yield and cash flow and. This focus should include the residual (upside) potential, giving careful consideration of the value and risk attributable to the location of the property.

• Credit Risk. Evaluate the capability of your lessee, or in a project financing the off-take buyer (such as an electricity buyer), to pay you amounts due under a lease or loan arrangement.

• Environmental Risk. Assess the risk that the facility or building may be located on or near a site containing any hazardous substance on, in or below the ground or in the air that may adversely impact your investment.

• Terrorism and Insurance Risk. Investigate the potential for terrorism risk in an objective light, without allowing low probabilities of loss alone to guide your risk mitigation analysis and planning. Require your lessee or borrower to acquire terrorism and other property and liability insurance that protects your respective interests in a cost-effective manner (though lessees and borrowers still resist buying terrorism insurance). See: Despite Increased Risks, Terrorism Insurance Has Few Takers, Business Leasing News (April 2003).

• Technology Risk. Study the technology planned for or that is used in and around the leased property, including technology used in the design, construction, maintenance and operation of the property. Assure yourself that the technology not only mitigates your risk, but also keeps pace with rapidly evolving requirements in modern buildings and facilities. For example, examine, the adequacy of fire systems, internal communications, surveillance systems, property barriers and alarms to mitigate terrorism and other operational risks.

• Legal and Other Regulatory Risk. Hire knowledgeable counsel and other experts, such as engineers, risk managers and investment advisors, to evaluate the physical risk to your building or facility investment. In addition ask these experts to assess and write appropriate contract provisions to cover issues such as the USA Patriot Act and other regulatory issues affecting your investment. See: Real Estate In A Risk Management Environment by Roger "Biff" Ruttenberg, abfjournal, Vol. 2, No. 1 at page 32 (January 2004).

Since 9-11, terrorism risk has become a part of everyday life in America. Whether we like it or believe it, terrorism risk management has joined, or should join, the list of items of due diligence in each significant and relevant leasing and/or lending transaction we do. By taking the extra step of evaluating terrorism risk, along with other routine due diligence items, owners, lessors and lenders can close deals with greater confidence that they have protected and enhanced their respective business opportunities through sound risk management practices.

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4. BLN Case & Comment: True Lease Case In re: Pillowtex, Inc. Affects Leasing, Energy Services Industries

The Third Circuit Court of Appeals in Delaware rendered a "precedential" decision recently on the question of whether a "Master Energy Service Agreement" ("MESA") constitutes a lease or a secured financing under New York law. In a 21-page opinion, In re: Pillowtex, Inc. et al., Duke Energy Royal, LLC argued unsuccessfully that the MESA with Pillowtex constituted a lease under common law or Article 2A of the Uniform Commercial Code ("UCC"). See: Duke Energy Royal, LLC v. Pillowtex Corporation, Case No. 02-2674 (3d Cir. Ct. of Appeals, Nov. 14, 2003).  The Court of Appeals concluded that the MESA was not a lease, and therefore Duke was not entitled to payments under Section 365(d)(10) of the Federal Bankruptcy Code. Instead, it generally agreed with the lower court and ruled that the MESA constituted a secured financing.

*Warning: In any bankruptcy proceeding, lessors should expect their lessees to challenge the lessor's rights to payment under Section 365(d)(10) if a shred of doubt exists that their transaction is a lease under applicable state law. This predictable challenge merits careful structuring of leases because, unlike secured financings, Section 365(d)(10) requires debtors-in-possession to "timely perform all of the obligations of the debtor...first arising from or after 60 days after the order for relief in a ... Chapter 11... under an unexpired lease of personal property... until such lease is assumed or rejected." In this case, when Pillowtex successfully challenged the characterization of the MESA as a lease, it escaped the obligation to make payments to Duke and thereby preserved valuable cash for its bankruptcy estate-a powerful incentive to mount a challenge against "lease" transactions.

A Brief Case Review

While a detailed review of the decision is beyond the scope of this article, a summary of the facts and law of the case demonstrates the importance of this decision for the leasing and energy service industries. 

Facts: The transaction reviewed by the Court involved the MESA, an eight-year contract in which Duke agreed to acquire, hold title to, and install at its cost approximately $10.41 million of energy savings equipment in nine Pillowtex facilities. The equipment included lamps and electronics ballasts, a waste heat recovery system and various other energy-saving equipment constructed specifically for the Pillowtex facilities. The equipment generally had a useful life of 20-25 years. Pillowtex paid a level amount of compensation to Duke equal to the expected energy savings that Duke expected Pillowtex to obtain from the equipment. Pillowtex accounted for such compensation as utility payments rather than rent. At the end of five years of the eight-year term, Duke expected to recover a "simple payback" of its investment. Duke retained various end of term options-the right to remove the equipment at its cost, abandon the equipment, extend the MESA term or give Pillowtex the option to purchase the equipment at a mutually agreeable price. The cost to remove the equipment was prohibitive for Duke when weighed against the nominal residual value of the equipment as removed at the end of the MESA term.

Law: The Court analyzed these facts primarily against the applicable rules of the UCC and the influential lease characterization case of In re: Edison Bros. Stores, Inc., 207 B.R. 801 (Bankr. D. Del. 1997). Specifically, the Court considered whether the MESA constituted a "lease" as defined in Section 2A-103(1)(j). That provision defines a lease as "a transfer of the right to possession and use of goods for a term in return for consideration, but a sale... or retention or creation of a security interest is not a lease." Noting the bright line between a lease and security interest, the Court also considered the definition of a security interest. As applied to the facts, the Court closely evaluated whether the MESA "created an interest in personal property or fixtures which secures payment or performance of an obligation" within the meaning of Section 1-201(37) of the UCC rather than a lease. See: page 10. The Court further reviewed the four elements of the "per se" rule in Section 1-201(37) of the UCC for determining whether the MESA transaction created a security interest as a matter of law. 

After extensive discussion, the Court concluded that the transaction did not create a security interest on the per se basis. It then moved, with the concurrence of the parties, to the second level of analysis-the "economic realities" tests as articulated by the lower court and In re: Edison Brothers, Inc. In doing so, the Court considered whether (a) the purchase option, if any, is for nominal consideration, (b) the lessee is required to make aggregate rental payments with a present value equal or exceeding the original cost of the leased property, and (c) the lease term covers the total useful life of the equipment. See: page 13. 

In a detailed analysis of these factors, the Court concluded that, despite the long life of the equipment and the intent of the parties to create a true lease, the MESA was not a lease when considering the economic realities of the transaction. The Court fundamentally based its conclusion on the fact that the rent did exceed the cost of the equipment, which indicated intent on the part of Duke to sell rather than lease the equipment to Pillowtex. See: page 14. The Court found further support in Duke's own testimony in the lower court proceedings that Duke would likely abandon the equipment because Duke would otherwise face a prohibitively high cost of to remove equipment with nominal residual value upon removal. Further, Pillowtex had control over the purchase option because Pillowtex could refuse to negotiate a price with Duke. This refusal would force Duke to sell the equipment to Pillowtex at a nominal price or abandon the equipment, thus neutralizing the purchase option as a realistic term of the MESA. 

*Comments: This case suggests several of the following important points:

• The lease versus security interest analysis extends beyond the application of Article 2A and Section 1-201(37) of the UCC to the "economic realities" test which may be determinative of a security interest even though the UCC analysis does not lead to a finding of a security interest;

• For the energy service industry, which concentrates its efforts on energy savings arrangements similar to the MESA, the case questions whether the parties can achieve off-balance sheet leasing when using structures similar to the MESA.

• The Court specifically confirmed that the UCC does not consider the intent of the parties; the only question is whether the transaction creates a security interest or lease regardless of the name of the document purporting to be a lease. See page 17.

For more information on this important case, please feel free to call me. In any event, watch closely that your leases comply with the economic reality approach enunciated In re: Pillowtex. Don't constitute a security interest under the "per se" test of 1-201(37) unless you intend to structure your transaction as a secured loan or a financing disguised as a lease.

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5. Leasing 101: How Do You Perfect a Security Interest in a Trust?

The rules of Revised Article 9 of the Uniform Commercial Code (UCC) will rarely forgive you for making a mistake in perfecting a security interest by filing a financing statement or otherwise. In particular, perfecting a security interest granted by a trust presents unique questions. This article briefly suggests steps you should consider taking to perfect a security interest granted by certain trusts commonly used in leveraged and certain single investor leases and loan transactions. This article does not address, among other relevant issues, priority of security interests in collateral.

*Warning: If you fail to perfect your security interest properly, and even if you do, you can expect your borrowers and/or lessees in a bankruptcy to challenge your priority to collateral or leased property, as occurred in Re Pillowtex in Article 4 above.

Sample Transaction: Owner A and Owner B (Owners) are the owner participants, settlors or trustors, Trustor of a common law or grantor trust (Trust). See: What is a Grantor Trust, Business Leasing News (December 2003).  XYZ Trust Company (Trustee) is the Trustee for Owner A and Owner B under a Trust Agreement. The Trustee has entered into a purchase agreement to buy a printing press and enters into a loan agreement with Best Bank to pay for the printing press. Best Bank needs a first priority, perfected security interest in the printing press in consideration for the loan. 

How does Best Bank perfect its security interest? Does it perfect in the printing press, or in the Trust or in the interest of the Trustee? Which question is the right one to ask when Best Bank must obtain a perfected security interest? 

Under Section 9-301(1) of Revised Article 9, Best Bank, as secured party, must file against the debtor at the debtor's location to perfect its security interest in the printing press. You don't consider the location of the printing press in Ohio. You must get the debtor's name exactly right and also determine where the debtor is located under Revised Article 9.

File Against the Debtor: The printing press constitutes property of the trust estate (that is, property owned in trust under the Trust Agreement). Under the trust laws of most states, the Trustee typically owns legal title to the printing press. The Owners only have beneficial interests in the Trust. The Trustee, in the words of Revised Article 9, has an interest in the collateral. Therefore, the Trustee, and not the Trust, is the "debtor" in this grantor trust. See: Section 9-102(a)(28).

Revised Article 9 requires that the secured party name its debtor exactly in the Financing Statement. Best Bank must therefore name the correct name of the debtor in this transaction. Because the "debtor" is the Trustee acting with respect to the collateral held in the Trust, Section 9-503(a)(3) of Revised Article 9 specifies ways for Best Bank to name the debtor:

• Specify a name in the Trust Agreement, such as "XYZ Trust 2004-1." Use that name in box 1a of the national form of Financing Statement. Such a name must be included in the organic documents of the Trust, namely the "Trust Agreement." See: Section 9-503(a)(3)(A). 

*Tip: Put a name of the trust in your trust agreement. Your work here will be far easier if you do. 

• If no name is specified for the Trust in its organic documents, the secured party must state the settlor's or trustor's name(s) in box 1a or 1b of the national form of Financing Statement, as appropriate, and provide other information that distinguishes the trust from other trusts with the same settlors or trustors. In this instance you could insert the name, "Owner A." 

*Technical Point: To distinguish the debtor from other trusts having one or more of the same settlors or trustors, you should add distinguishing information such as the date of the trust agreement elsewhere in the Financing Statement (e.g., box 10, miscellaneous information). Further, to meet the requirement of Section 503(a)(3)(B) of Revised Article 9 indicating within the Financing Statement "that the debtor is . . . a trustee acting with respect to property held in trust, " you could check the second item in box 17 of the national form of UCC-1 Financing Statement Addendum. 

Location of the Trust: Best Bank must file where its debtor, the Trustee, is located. See: Section 9-307 of Revised Article 9.

*Technical Point: Some trusts constitute registered organizations and other trusts do not. For example, a common law or grantor trust is generally not a "registered organization" under state law with a location determined under Section 9-307(e) of Revised Article 9. Such a trust exists as an organization only under its organic documents. By contrast, a Delaware statutory trust (previously called a Delaware business trust) is a registered organization separate from its settlers/trustors and trustees. This kind of trust is located in the state in which it is created (namely, in Delaware). See: Section 9-307(e) of Revised Article 9. The statutory trust (and not the trustee) is the debtor under Section 9-301(1).

This area of Revised Article 9 has many twists and turns, requiring you and your counsel to ask the right questions, and make the correct filings, in the right locations and in the exact debtor names. The drafters of Revised Article 9 aimed to enhance and clarify the rules of secured transactions in the UCC. However, in this area, better does mean simpler.

*Tip: Consult knowledgeable counsel to perfect your security interests correctly. Work with the trustee's counsel to check for state variations in Revised Article 9 that may affect your filings. For more information on UCC filings against trusts and trustees, see: Filings Against Trusts and Trustees Under Revised Article 9-Thirteen Variations, 33 UCC L.J. 91 (2002), by Norman M. Powell, Esq. 

I would like to thank Norman Powell for his assistance in editing this article.

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6. BLN Briefs: Residual Value Guarantees Restricted, Commercial Aviation Market Warms Up

Residual Value Guarantees Lose Value. For most public companies, Emerging Issues Task Force (EITF) Topic No. D-107 takes effect this month. Lessors have often purchased third-party residual guarantee of portfolios of operating leases under Financial Accounting Standards No. 13 (FAS No. 13) to achieve desired capital lease treatment under Section 7(d) of FAS No. 13. However, the accounting treatment of a single transaction was unclear when a residual guarantee supported a whole portfolio of deals. For more on this topic, see: SEC Speaks on Third Party Residual Guarantees by Robert Keyes, ELT, The Magazine of Equipment Leasing & Finance at page 22 (November/December 2003).

*Tip: Past and future deals will generally need to be restructured or structured, respectively, to provide for residual guarantees from third parties in support of one deal at a time, and not on portfolio or pooled basis. 

Commercial Aviation Market Warms Up. After diving into the worst economic loss trough ever, the cyclical market for commercial aircraft pricing, lease rates and growth is rebounding, slowly. Current inventory in the Arizona desert remains at around 1,720 units or 10.9 percent of the worldwide fleet. See: aircraftinvestor, by Sigma Aircraft Management LLC (Quarterly Newsletter Nov. 2003).

*Comment: Despite the potential for improvements in this market, airlines, lessors and lenders must still cope with reality that airlines will have serious difficulty justifying the cost of returning old technology aircraft to service. Consequently, more write-downs and write-offs by lenders and lessors may continue to discourage new investments in the near term. Watch for new aircraft with regional airlines to provide a source of deals in 2004. Expect workouts to continue. 

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7. Training Offered, Recent Publications, Upcoming Speech

Training - 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 training includes topics 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:

• Tax Lessors Get a Bonus From New Depreciation Regulations, Monitor (Nov./Dec. 2004) 
   

• Federal Tax Law Changes Abound: More Bonus Depreciation and Deductions Affecting Leasing, ELT, The Magazine of Equipment Leasing and Finance, The Equipment Leasing Association, October/Annual Convention Issue 2003.

Upcoming Speech

Please attend the 11th Annual Current Issues in the Law of FAA Aircraft Registration, Lien & Security Interests, at the Eden Roc Renaissance Resort & Spa, Miami Beach, Florida. My speech is: Cross-Border Aircraft Transactions: Key Issues and Approaches to Closing the Real Deal. It occurs 10:45 a.m. to 11:15 a.m., Tuesday, February 3, 2004. Strategic Research Institute sponsors this conference. For information and registration, call (800) 666-8514 or (646) 336-7030.

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A Message From the Publisher, David G. Mayer

BLN Celebrates its Second Anniversary- A New Year of Change

With this issue of Business Leasing News, I am delighted, and a bit amazed, that BLN has reached its second anniversary, having been published every month for the last two years, starting January 2001. I have written at least 120 articles and provided an estimated 800 or more web sites and other resources in support of these articles. Our e-mail list has grown from a few hundred to thousands. 

BLN began as an outgrowth of my book, Business Leasing For Dummies, which offered "leasing and financing strategies for your success." Your feedback over the past two years has been overwhelmingly positive. You have steadily increased your contact with me, especially in the last six months. I welcome your contact and encourage you to call or e-mail me. I greatly value building new and existing relationships and enjoy sharing information and insights with you on any subject in BLN or other subjects of importance to you.

When I consider articles for BLN, I use many criteria in selecting a topic. An article must, in all cases, be useful, concise and timely. It should help you make money or offer ideas on legal, accounting, tax, risk management or other issues that you can apply immediately to your business. In evaluating these standards and our editorial approach to BLN, I have decided, in consultation with the BLN team, to make some changes to BLN in 2004. Starting with this issue, I will: 

1. Reduce the number of articles in BLN by up to two articles per issue to save you time, control page length and focus more selectively on current issues; 

2. Introduce a new section called "BLN Case & Comment" which will appear periodically to discuss significant judicial decisions, tax rulings or other precedent that you can apply to your deals, workouts or business operations; and

3. Broaden the scope of BLN to cover more topics related to leasing and financing and the various types of property that you may finance or lease this year. 

BLN is a free publication because we value opportunities to make new connections throughout the business community. One of our important goals in publishing BLN is to build solid, mutually beneficially professional relationships. BLN, we hope, stands out among law firm publications, just as Patton Boggs LLP shines among its peers, including other international law firms. Our tag line—"Seeing Things Differently"—represents one of our core values, and in part, enables me to offer valuable, innovative legal services well beyond the norm and the scope of BLN. Please fee free to contact me directly by telephone (214) 758-1545 or by e-mail at dmayer@pattonboggs.com.

Have a great New Year and thanks in advance for taking your valuable time in 2004 to read and forward BLN to others.

Feedback From You-A Celebration of BLN's Second Anniversary!

Most months I share comments I receive on Business Leasing News. In this, our second anniversary (25th) issue, here are some recent illustrations of your comments over the past two years:

Here's a comment I received by e-mail: "I just started reading Business Leasing News. I find it extremely professional and informative. The citations you provide are excellent!!  A nice lawyer's touch-you can go to the cite, see the source of the information and research the matter in more depth. I am amazed that you can practice law full-time and put out this great newsletter. Some people are just remarkably productive!! Thank you for being way out there on the Bell Curve for productivity, legal and finance acumen, etc." 

Another reader called and left this message on my voice mail: "I just read Business Leasing News on my flight, the latest edition [November], and it was very good, very very impressive, very helpful, especially for business people because it is written in plain English." 

A third reader added: "Great job, David on the newsletter. Thanks for including me on the distribution list-your newsletter is a wonderful tool that helps me stay up-to-date on leasing issues. I thank you for your attention to the details on leasing!"

As always, thanks for your comments.

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 our 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 and secured transactions 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 healthcare assets. We also structure, negotiate and close secured transactions of all kinds, tax exempt, state 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, 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, Sheila McCoy, Steve Reagan and our primary web site review partner, Jeff Turner. The technical team, consisting in part of George Barber, Winston Jackson and Adrian Nicole McCoy, provide BLN's unique e-mail navigation and artistic appearance.

PLEASE FORWARD THIS E-MAIL TO OTHERS. You may, for this purpose, disregard Patton Boggs' distribution restriction at the bottom of this email. 

All the best, 

David 

David G. Mayer 
Founder and Publisher
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 2004

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