Leasing News

It’s rare that you see anyone but traders or company CEOs on CNBC, but on Tuesday and for the first time, the $650 billion equipment leasing and finance sector was represented on CNBC’s “Street Signs.”

The show and the interview segment was hosted by CNBC’s Erin Burnett and the subject was the addition of equipment finance ABS into the Term Asset-backed Loan Facility (TALF), one of the programs created by the government to stimulate the markets. The interview was conducted while the TALF auction was occurring and featured Equipment Leasing and Finance Association President Kenneth Bentsen and Wall Street Trader Dennis Moroney of the Towergroup. CNBC has 83 million viewers, and the CNBC website is constantly streaming to 4 million viewers. Washington DC, New York, San Francisco and Los Angeles are collectively CNBC’s numero uno market.

"Why some of the biggest players in lending are not playing today, with Ken Bentsen, Equipment Leasing and Finance Association; Dennis Moroney, Towergroup; and CNBC's Erin Burnett."
http://www.cnbc.com/id/15840232?video=1085905952&play=1

Spiral Binding, Totowa, NJ was the vendor on a series of leases from December 31, 2008 through March 04, 2009 for $148,604. Fifty two percent of the outstanding balance is from December.

The company was told they would be paid in full when the lessee made their first payments. The lessee has now made lease payments on all the outstanding leases according to Spiral Binding.

After repeated telephone calls, the company was to be paid in January,
then February, then March. It took many telephone calls and emails to various parties at IFC Credit, according to Bob D'Alessio, Chief Financial Officer, Spiral Binding until IFC told them they didn't have the money.

Originally they assured Spiral Binding they would be paid, when that was not going to happen they offered $10,000, every two weeks. Spiral Binding was not amenable to the offer and counter offered with at least $25,000 every two weeks. IFC rejected Spiral Binding’s request and then balked on the $10,250 payment they were going to send March 27th, 2009. IFC has now postponed the payment of $10,250 to April.

When they learned that IFC CEO Rudy Trebels had purchased a house on the golf course in Florida, it appears they have to bring the matter to court now and file in New Jersey before the premises are vacated.

Since March 27, 2009 Leasing News has attempted to reach CEO Rudy Trebels, CLP, Executive Vice President Patrick Witowski, Chief Financial Officer Marc Langs, Senior Vice President, Controller and Treasurer David Keenan, IFC Credit Attorney Beth Anne Alcantar, as well as Mr. Rudy Trebels', CLP, secretary and public relations contact, plus Vice President of Marketing, First Corp., Mike Beltrano, Jr. Over six emails, perhaps a dozen telephone calls; none with a response.

Bank of Kansas City holding an original portfolio of $97 million, now down to $76 million, filed a motion for relief and the action appears to have pushed SunBridge Capital into a voluntary Chapter 11. There appears to be over $100 million in debt. Three creditors claiming to be owed more than $102,000 have filed a Chapter 7 involuntary bankruptcy petition against SunBridge Capital Inc., Kansas City, Kansas on March 20, 2009. There appears to be more to follow, as local banks seem to be holding the bag as well as Lakeland Bank, HSH Norbank, and Midwest Bank.

A meeting of Creditors 341(a) meeting will be held on Monday, May 4, 2009 at 11:00 AM at KC Room 173, United States Bankruptcy Court, District of Kansas.

SunBridge CEO Adrian Weber and other witnesses were called to a meeting yesterday, April 7, 2009 at 2:00pm with other witnesses to appear, including those “necessary for rebuttal, foundation, impeachment, or authentication.”

In the meantime, the list of those who have taken losses, have potential losses, agreed to a method of collecting lease payments and set up a “transition agreement,” where: "Each Lender which is signatory hereto, shall place in a separate account designed by SBM as to each lender (the "Deposit Accounts" or as to each Lender the "Deposit Account"), the amounts as set forth below:

There is no filing at press time regarding Portfolio's held by
LEAF Corporation or New World Equipment Funding.
Attorney for Debtor and Debtor-in-Possession:
Spencer Fane Britt & Browne, LLP, represented by Scott J. Goldsein, Lisa A. Epps
sgoldstein@spencerfane.com/lepps@specerfance.com
1000 Walnut, Suite 1400
Kansas City, MO 64106
(816) 474-8100
(816) 474-3216-Fax

First United Bank & Trust, Oakland, Maryland has filed a major fraud case in the United States District Court for the Middle District of Pennsylvania, Harrisburg Division, primarily against the PNC Financial Services, Pittsburg, PA., as well as their company they purchased Sterling Financial Corporation, Lancaster, PA, and Equipment Finance, LLC, both located in Lancaster, Pennsylvania.

They are claiming "...fraud against First United are shocking, outrageous and in bad faith that punitive damages are warranted. As a corporate successor, PNC acquires the liabilities and debts of its predecessor Sterling and its alter ego EFI. Wherefore, First United demands judgment in its favor and against EFI and PNC in the amount of the purchase price of $1,238,111.10 less principal payments received, if any, plus accrued and accruing interest, late charges, attorneys' fees and costs, and punitive damages in the amount of $10,000,000.00, and such other relief as this Court deems necessary or appropriate."

The loans were made with the representation that the seller were “experts in the field of loans in the logging industry, and on the logging industry itself…The United States Office of the Controller
of Currency had undertaken two separate reviews of EFI’s equipment loan portfolio. Eight specific loans were mentioned, accusing Sterling
“…subverting the putative internal controls of EFI; concealing credit delinquencies; falsely claiming no losses on the Loan Portfolio; falsifying financial contracts and related documents; and related actions and inactions with EFI’s equipment loan business.”

The claims states the eight loans sold to First United were part of the "irregularities" in Sterling's financial statements for the years 2004, 2005, and 2006, related to equipment financial contracts at EFI, the timing, as well, covered in the following press release:

Paul Menzel, CLP, first recipient of the Leasing News Person of the Year Award, 2005, will present Robert Teichman, CLP, with the 2008 Award at the Las Vegas National Association of Equipment Leasing Broker Conference Business Conference Luncheon on May 1st, Las Vegas, Nevada.

Paul is president of Financial Pacific, Federal Way, Washington. He has been in the commercial equipment leasing industry, managing the same portfolio from his days at Puritan Leasing, for over 30 years and arranged the acquisition of the Leasing Division by Santa Barbara Bank & Trust in 1996 and then the sale to LEAF Corporation. He was named Leasing Person of the Year for 2005 by Leasing News. He is a former board member of the Equipment Leasing and Finance Association as well as the United Association of Equipment Leasing, also very active in his community. He is a Certified Lease Professional, a graduate of UC Berkeley and holds an MBA in Management.

New at the Las Vegas Conference:
A professional portrait to use on business cards, e-mail signatures, websites, business networking profiles and more." Just stop by booth 413 at the 2009 NAELB Annual Conference in Las Vegas on Friday, May 1 to sign up for an appointment. Then dress to impress on Saturday, May 2 to have your portrait made with no sitting fees and no obligation to buy."

Sales Make it Happen --- by Robert Teichman, CLP

"Shooting at the Right Target"

“This is the worst I have seen for years”. That is the complaint from lessors, brokers, bankers, funders and almost everyone in the equipment leasing business, particularly those who have been in the business for years.

But what is “the worst”? Is it the general downturn, or is it, more likely, the dramatic increase in turn downs? Everywhere you look, funders, at least those who are still in the business of funding lease transactions, are tightening their credit standards. And they are limiting new transactions by geographical location, by size of transaction, by equipment type, by industry, by any number of different parameters.

Brokers and lessors who have done well for years submitting “app-only” transactions are finding that their sources of money are now limiting the maximum funded amount. Where once you could look to $150,000 and more” app-only”, the ceiling is now well under $100,000. And often there is a request for financial information; tax returns, bank statements and the like. Funders want to know more about the applicant, and rightly so, since first payment and early defaults are rising, as are delinquencies overall.

Fewer funders are accepting fewer transactions. One possible solution is to find more deals, make more calls, contact more vendors – and throw more stuff against the wall in hopes that the hit ratio will go up. But if the credit quality is poor, or if the deals don't meet the funders' guidelines, it will all be a waste of everyone's time. You may be working harder, but you are not working smarter. And dumping a lot of paper on the funder doesn't say much for the source's professionalism.

The target isn't finding more deals. The target is to submit approvable deals. Many lessors and brokers tell me that they have plenty of transactions, since much of their competition has left the business. But they have difficulty in getting their applications approved.

If a lease broker or salesman is to be successful, there has to be a re-focus from finding deals to professionally placing them.

First, know thy funder. Yes, we have been saying the same thing for years, but funders' guidelines are changing rapidly. One funder I spoke to insisted that they had “always” looked at transactions only from companies with annual sales of $100 million or more. After a little discussion, he admitted that this was a major, and very recent, change. So call often; don't wait for an e-mail telling all about the latest standards. They may have been changed weeks earlier.

Don't try to jam a very square peg where it won't fit. Don't send a software-only deal to a funder who you know won't take any equipment that isn't painted yellow. If your funder will only do deals in, say Utah , don't send something from Southern California .

Second, know your customer. The more you know about your customer's history, about the purpose for the equipment, about the customer's future plans, the more likely you are to get the transaction approved. And this information must be transmitted to the funder as part of the application. You don't want the funder to guess how the customer will use the equipment, or why they are buying it. You have to tell the story.

A good reporter remembers and uses these words; who, what, where, when, why and how. For instance, “Our customer, Jones Fencing (“who”), is planning to get a Smith Model A-75 wire twister costing $50,000 (“what”) for their plant in Irving, South Dakota (“where”) in June (“when”) to increase their production of barbed wire fencing (“why”). Their existing cash flow will service this new lease (“how”).”

In a couple of paragraphs you can tell the whole story, including the company's financial historical and operational history.

Spending time in getting all the details will pay dividends in more approvals and in your funder's increased respect for your professionalism.

Bullseye!

Robert Teichman, CLP, is the Leasing News Person of the Year for 2008. He is 2007-2008 president of the Certified Lease Professional Foundation and Chairman of the Leasing News Advisory Board; one of the original founders of internet trade publication as well as one of the originals in the formation of the CLP program. His career spans over 45 years with Belvedere Equipment Finance, Crocker Bank, Dividend Leasing, New England Capital, Sumitomo Bank, as well as his own company Teichman Financial Training, Sausalito, California .

During this time, he has also been on the Board of the United Association of Equipment Leasing (1997-1998, 2002-2003) as well as active in the National Association of Equipment Leasing Brokers (NAELB) with workshops and educational programs plus participation in the growth of the CLP Foundation, NAELB, and UAEL. He also is an Advisor to the USAID and has worked in Ukraine training local bankers and lessors in US-style middle market leasing. He created a leasing school and certification program for people who want to enter the leasing business in the Ukraine and surrounding countries. He also is a current consultant to the World Bank for lease training in Kosovo and other locations.

Robert Teichman, CLP
Teichman Financial Training
415-331-6445
BoTei@aol.com

Sales Makes it Happen articles:
http://www.leasingnews.org/Legacy/index.html

Microsoft Vista shipments are going strong and its successor, Windows 7, is still more than six months away from scheduled launch, but unlike it allegedly did with the successor to XP, Gartner is recommending that companies start evaluating the new OS now. Prior to Vista's launch in 2006, Gartner analysts were telling companies to hold off on upgrading for a couple of years. The research giant was wrongly perceived as being 'against' the radical new operating system, but that wasn't the case, said Gartner's Steve Kleynhans, VP client computing.
"We have never trashed Vista per se." What the research company said was that organizations -- especially large enterprises, have to be realistic. "The corporate environment is like a supertanker& it's going to take them at least a year just to kick tires." He said organizations with 1,000-plus users will take approximately 18 months to thoroughly test the software and put in place the appropriate implementation program. Then it will take up to another 36 months for the roll-out. That's close to a five-year cycle, and that's one reason why he is recommending companies start looking at Windows 7 now, rather than later.

While more than 150 million copies of Vista have shipped in the last three years, Kleynhans puts the corporate installed base at only 10 percent. The current economy didn't help matters, but that makes it even more important to be prepared for Windows 7, he said.

Although the new OS isn't scheduled for general availability until early 2010, and start shipping to PC manufacturers in the fourth quarter, he thinks Microsoft might speed things up.

"I think Microsoft is motivated to get it out early, probably before the end of the 3rd quarter." Kleynhans thinks as many as 50 percent of companies will skip Vista and go straight to the new OS. "Windows 7 looks and acts a lot better than Vista. Windows 7 won't have to take all the pain of Vista. Vista took that pain."

He said the new OS looks a lot better, and in many ways, is a lot better. However he added that Microsoft didn't set the bar very high for Windows 7. "It's relatively incremental polishing of what they did with Windows Vista. I think they came up with product well suited for current times."

While not as sanguine about skipping OS generations as Kleynhans, Microsoft spokesman Elliot Katz does agree that the time is right for the next version of Windows, and that both SMBs and the channel will see huge benefits. "Windows 7 is very important. It allows the channel to reinvigorate the whole ecosystem because there will be renewed interest in the operating system and there is pent-up demand for Windows 7."

The value proposition is equally compelling for small and midsize businesses, he said. In gaining the benefits of a modern OS, customers will see improvements in being productive anywhere, security and management. Features like DirectAccess and BranchCache will improve performance for mobile and branch-office workers. Security will be enhanced with BitLocker To Go, AppLocker and an improved User Account Control. And Katz said Windows 7 makes it easier to manage and deploy desktops, laptops or virtual environments.

"It's very important that small and medium businesses as well as enterprises are planning their move from Windows Vista. If they don't have plans in place, they should be thinking about the move to the next operating system."

Katz also disagrees with Kleynhans about Windows 7 shipping early. "Originally we were looking at January 2010& (and we're) still on target for that, general availability in the early part of 2010."

Both Microsoft and Gartner are in agreement that the product roll-out will be a lot smoother than in the past, largely because of Microsoft's experience and the tremendous feedback it gets from beta users. Katz said the data is not only broader -- more users -- but also deeper. One result is that the company can go with just one release candidate at this time.

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1935 - The Works Progress Administration (WPA) was approved by Congress. President Franklin Roosevelt proposed the Works Progress Administration (WPA) during the Great Depression of the 1930s when almost 25 percent of Americans were unemployed. The WPA created low-paying federal jobs to provide immediate relief. The WPA put 8.5 million jobless to work on projects as diverse as constructing highways, bridges and public buildings to arts programs like the Federal Writers' Project.
http://memory.loc.gov/ammem/today/apr08.html

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