Structuring Equipment Financing: Lease Accounting Rules, Bundling Services and Software, UCC and Bankruptcy Treatment
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Wednesday, August 19, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine important new developments in equipment financing, including the implementation of lease accounting standards and bundled lease structures which include service components. The panel will also discuss recent case law regarding "true lease" categorization, damages and other issues, and how tax reform might affect tax treatment of equipment leases.
Mr. Gross has over 25 years of experience representing bank-affiliated and large, independent equipment financing companies in all aspects of equipment finance transactions, and handles all types of equipment finance matters and structures. He received the Distinguished Service Award in 2008 and ELFA’s Legal Committee Edward A. Groobert Excellence in Leasing Award in 2011.
Mr. Liberatore is the Deputy General Counsel for De Lage Landen Financial Services Inc., a global provider of leasing and business finance solutions, including vendor finance. He has been practicing law for over 28 years, focusing in the areas of leasing and asset based lending, and has served in a variety of senior in-house legal positions with DLL, IOS Capital Inc. (the captive finance subsidiary of IKON Office Solutions Inc.), Copelco Financial Services Group Inc. and the FDIC. Mr. Liberatore is the former Chair of the Legal Committee of the Equipment Leasing and Finance Association and is the current Chair of the ABA Business Law Section on UCC/Leasing and a member of the American College of Commercial Finance Lawyers.
Mr. Nagus specializes in serving mid-size businesses and large corporations in the manufacturing and distribution, media and entertainment, technology (including SaaS), healthcare, professional services, defense and government contracting, and biotech and life sciences industries. He has over 18 years of experience in both Public Accounting and industry, including audit and technical accounting experience and as a Revenue Manager for a publicly traded company. His areas of specialization include technical accounting, financial reporting, financial and project management. He is knowledgeable in complex accounting and reporting matters, including lease accounting and revenue recognition for multiple deliverable arrangements, software revenue recognition, as well as the new revenue (ASC 606) and lease (ASC 842) accounting standards.
Mr. Fishburn joined ELFA in September 2012. He directs and operates all aspects of the association’s federal relations strategy and the engagement of members in political programs.
While equipment finance practice evolves continuously, the area was impacted on several fronts in 2018 and 2019. Financial statement preparers for both lessees and lessors have had to identify and resolve the many technical accounting issues associated with the implementation of the new lease accounting standards (Accounting Standards Update No. 2016-02; Topic 842). At the same time, the 2017 tax reform bill had significant implications regarding the core issues about equipment finance.
Lessees need to determine financial reporting and tax objectives in structuring and pricing equipment leases going forward, including factors such as lease duration, control of equipment, lease payments, and purchase options.
The sale of equipment is often bundled with software and services provided by the vendor relating to maintenance and operation. This further complicates the related equipment finance transaction, which must contemplate continued involvement by the vendor and a separate service agreement (or, in some cases, a combined/bundled lease/service agreement) to operate in tandem with the equipment financing.
Several notable court rulings in 2018-19 involve disputes between parties to equipment financing transactions. The issues considered include whether a transaction documented as a lease creates a "true lease" or a UCC security interest; the rights of assignees; waivers of defenses and "hell-or-high water" payment obligations; vicarious liability of a lessor; and lessor's damages remedies. These cases provide valuable insight to counsel in structuring equipment finance transactions.
Listen as our authoritative panel discusses the recent changes and rulings that may affect the structure and enforcement of equipment financing transactions. The panel will also analyze how tax reform has changed the tax treatment of equipment leases, and will highlight certain equipment finance/emerging tech-related issues under consideration for related revisions to the UCC or its official comments, including bundled transactions and electronic chattel paper.
- Equipment finance: standard lease structures
- Capital leases
- Operating leases
- New lease accounting standard: change in treatment of operating leases
- Tax reform
- Bundled or mixed equipment transactions
- Recent case law
- UCC Emerging Tech Study – issues relevant to equipment finance transactions
The panel will review these and other key issues:
- What is the significance of the new lease accounting standard, and how has it impacted equipment financing?
- How should bundled services and products be reflected in equipment leases?
- What do recent court decisions say about when a lease is deemed a "true lease" as opposed to a lease that creates a security interest? What is its significance in bankruptcy?
- How does tax reform impact equipment financing?
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