1999—Pictures from the Past

Regional Sales Manager
Jim Stekl

Account Executive
George Vandel

Broker Sales Representative
Deb Schnaible

 

TODAY

Jim Stekl
National Business Development Manager
Western Equipment Finance
Sioux Falls, South Dakota

George Vandel
Owner, Capital Partners, LLC
Sioux Falls, South Dakota

Deb Schnaible
National Account Manager
GreatAmerica Financial Services
Marshall, Minnesota

 

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Classified Ads---Credit

(These ads are “free” to those seeking employment or looking
to improve their position)

Credit, syndication, workout experience Exceptional work ethic, common sense coupled with practical experience in equipment finance, consumer, commercial. Can interact with all levels of borrowers and intermediaries. Not an originator – but can help sales team close – great up sell ability. Will relocate for the right opportunity AND can work remotely.aaacorrespondent@gmail.com

Orlando, Florida As a Commercial Credit Analyst/Underwriter, I have evaluated transactions from sole proprietorships to listed companies, across a broad spectrum of industries, embracing a multitude of asset types. Sound understanding of balance sheet, income statement and cash flow dynamics which impact credit decisions. Strong appreciation for credit/asset risk.  rpsteiner21@aol.com  407 430-3917

Free Posting for those seeking employment in Leasing:
http://www.leasingnews.org/Classified/Jwanted/Jwanted-post.htm

All “free” categories “job wanted” ads:
http://www.leasingnews.org/Classified/Jwanted/Jwanted.htm

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H.8 data indicates banks had lending/leasing surge in Q2
SNL Financial Exclusive Report
by Divya Lulla

Aggregate loans and leases at commercial banks grew at an annualized 7.7% in the second quarter, higher than the annual growth rates for the years 2009 through 2013 and the annualized 5.5% growth posted in the first quarter, according to the Federal Reserve's July 11 weekly H.8 release.

Average deposits grew slightly less than loans, at an annualized rate of 7.6%, down slightly from the first quarter's 8.3% rate.

Loans and leases held by banks averaged $7.667 trillion in June, up $62.20 billion, or an annualized 9.8%, during June, from $7.605 trillion in May. Average deposits rose $29.40 billion or 3.5% during June to $10.162 trillion, from $10.132 trillion in May.

The Federal Reserve's H.8 report presents estimated aggregate balances of assets and liabilities at commercial banks in the U.S. The Fed estimates the data by benchmarking weekly reports provided by a sample of banks to quarter-end call reports. The Fed calculates the monthly estimates by averaging the weekly estimates for the month. The Fed includes all domestically chartered banks and U.S. branches and agencies of foreign banks in its definition of "commercial banks." The Fed seasonally adjusts all data.

Deposits
Deposits at large commercial banks averaged $5.860 trillion over the month of June, up 0.56%, or $32.90 billion, from $5.827 trillion in May. Small commercial banks grew average deposits to $3.178 trillion, up 0.24%, or $7.60 billion, compared to $3.171 trillion in May.

Loans and leases
Average loans and leases at small, domestically chartered banks grew by 0.73%, or $18.80 billion, to $2.604 trillion in June. Large commercial banks grew average loans by 0.58%, or $24.70 billion, to $4.317 trillion during the month, up from $4.292 trillion in May. A few banks have already reported their second-quarter results, including JPMorgan Chase & Co. The bank did indeed see loan growth, reporting record originations in its business banking segment. CFO Marianne Lake said during the company's July 15 conference call that originations in business banking were up 46% year over year, according to a transcript.

The Federal Reserve defines large commercial banks as the top 25 domestically chartered commercial banks, ranked by domestic assets as of the last call report filing. Small commercial banks comprise all domestically chartered commercial banks not included in the top 25. Commercial banks include the U.S. branches of foreign banks in addition to domestically chartered banks.

Commercial and industrial lending grew by 0.96% during June among U.S. commercial banks. Small banks grew their loans by 0.87%, while their larger peers increased lending at 0.97% during June.

Consumer lending increased 0.55% during the month. Average consumer loans were recorded at $1.170 trillion during June, up from $1.163 trillion in May. Credit cards and other revolving plans increased 0.25% during the month, while other consumer loans rose 0.87%. Consumer lending grew 0.92% for small, domestically chartered banks while their larger counterparts recorded an increase of 0.40% in their consumer lending portfolios.
Real estate loans also recorded an increase of 0.62% during the month. Average real estate loans during June were recorded as $3.594 trillion, up $22.1 billion, from $3.572 trillion during May. Revolving home equity loans declined whereas close-end residential loans and commercial real estate loans rose during the month.

Sandler O'Neill analyst R. Scott Siefers commented in a July 14 research report on the second-quarter H.8 data, terming it as the "best quarterly performance since first quarter 2008." He further added, "While this cycle's lending recovery certainly has not been history's strongest, we remain encouraged that total loan growth continues on a pretty steady acceleration. … In other words, lending momentum seemingly continues to pick up steam as time rolls on."

Unrealized gains and losses
Unrealized gains declined in June, with commercial banks reporting $8.9 billion in gains, down from $10.3 billion in gains reported for May. Unrealized gains at large commercial banks declined 23.20% during the month, with the group posting $9.6 billion in gains, compared to the $12.5 billion reported in May. Small commercial banks recorded gains for the first time in six months and posted $1.1 billion in gains in June as opposed to $300 million in losses in May.

SNL Financial compiled the 15 U.S. commercial banks with the highest change in net unrealized gains or losses in the first quarter. Cincinnati-based Fifth Third Bancorp booked the highest unrealized gains in the quarter with $232.5 million, up $109.7 million from $122.7 million at the end of the fourth quarter of 2013.

 

 

Collector, Atlanta, GA Experienced, calling 11-90 day delinquent customers, assisting Asset Re-marketer with delinquency reporting, weekly reporting to home office. Sales, Chicago, Atlanta Work out of main office and satellite. Heavy phone sales calling on both independent dealers and end users (cold/warm calling), marketing, weekly reporting to management. Outside territorial salespeople will also be considered. Contact: Michael Testa 312-881-3133 mtesta@secondcityleasing.com www.secondcityleasing.com Financing for Commercial Truck & Trailer, Exotic, High Line, Vintage & Classic Automobiles, Taxi, Livery & Paratransit

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Bank Failure in Georgia
Not All Banks Doing Well

The two offices of Eastside Commercial Bank, Conyers, Georgia, were closed with Community & Southern Bank, Atlanta, Georgia, to assume all of the deposits. Founded in November 1, 2005, as of March 30, 2014, the bank had 17 full time employees at its offices in Conyers and Duluth.  Year-end 2007, there were 27 full time employees.  Tier 1 risk-based capital ratio: 2.52%    

Eastside Commercial Bank is the 13th FDIC-insured institution to fail in the nation this year, and the first in Georgia. The last FDIC-insured institution closed in the state was Sunrise Bank, Valdosta, on May 10, 2013. The state had five bank failures in 2008.  It hit 25 in 2009, 21 in 2010, 23 in 2011, and 10 in 2013, making it one of the states with the most bank failures. There were only three in 2013.

Conyers is the only city in Rockdale County, Georgia, 24 miles east of Atlanta. Most recent census, 2009, reported population of 13,941.

Zillow has 1271 homes for sale in Conyers
http://www.zillow.com/conyers-ga/

Black alone	8,794 (58.2%)
White alone	3,817 (25.3%)
Hispanic	1,999 (13.2%)
2 or more races	303 (2.0%)
Other race alone	148 (1.0%)
American Indian	28 (0.2%)
Asian alone	13 (0.09%)

13 banks located in Conyers
http://www.city-data.com/city/Conyers-Georgia.html

USA Today reports: "The bank with the highest Texas ratio: Eastside Commercial Bank, in Conyers, Ga., clocking in at 1,030.75%. Second-highest: First City Bank of Florida, in Fort Walton Beach, Fla., with a 639.12% Texas ratio.

"Georgia has 40 banks with Texas ratios higher than 100%, the most of any state, and Illinois comes in second, with 24. Texas had only two."

John May was the original President and CEO of Eastside Bank, who told the "rockdalecitizen.com" November 30, 2009. "Our problems are largely a result of the slowdown in the residential construction industry that occurred dating back to 2008," he said. "We identified those problems early and took action and have begun to make progress."

May said that the cease and desist order has had and will continue to have no impact on Eastside Bank's customers.

"We still have full FDIC coverage. Our customers can still take out loans and make deposits," May said.

He said the bank had already stopped making loans two years ago to residential construction companies, which represented just a portion of its customer base.

"We continue to maintain our focus on small- to medium-sized businesses," he said.

May said Eastside Bank will continue to operate under the guidelines of the cease and desist order until the FDIC re-examines the bank at some yet-to-be-determined date.

"It's usually a one- to two-year process, but as long as we're compliant with the agreement, then we're fine," he said.
http://www.rockdalecitizen.com/news/2009/nov/30/eastside-bank-complies-with-fdic-orders/#comments

Charge Offs
(in millions, unless otherwise)

2006    0
2007    0
2008  $2.8 ($2.76 construction/land development, $84,000 commercial/industrial loans)
2009  $2.1 ($2.0 constr./land, $85,000 commercial/industrial, $14,000 individuals loans)
2010  $2.9 ($1.7 constr./land, $827,000 commercial/ind., $409,000 multifamily, $3,000 indiv.)
2011  $2.6 ($1.3 nonfarm/nonres., $746,000 const./land, $387,000 multifamily, $81,000 1-4 family, $53,000 commercial/industrial)
2012  $4.3 ($2.3 nonfarm/nonres.,$1.7 construct./land, $126,000 1-4 family, $114,000 multifamily (-$31,000 commercial/industrial)
2013  $781,000 ($479,000 construct./land, $153,000 nonfarm/nonres., $137,000 multifamily, $23,000, 1-4 family, -$11,000 commercial/industrial)
3/31  $1.5 ($1.2 commercial/industrial, $269,000 nonfarm/nonres., $24,000 construct./land)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

(in millions, unless otherwise)

Non-Current Loans

2006 0
2007 0
2008 $10.4
2009 $13.7
2010 $6.1
2011 $12.5
2012 $14.0
2013 $13.8
3/31  $12.4

Profit

2006 $537,000 
2007 $1.3
2008 -$2.4
2009 -$1.3
2010 -$4.1
2011 -$5.6
2012 -$4.6
2013 -$600,000
3/31  -$778,000

Net Equity

2006 $12.0
2007 $19.5
2008 $17.2
2009 $18.6
2010 $14.5
2011 $9.2
2012 $4.5
2013 $2.4
3/31  $1.9

As of March 31, 2014, Eastside Commercial Bank had approximately $169.0 million in total assets and $161.6 million in total deposits. In addition to assuming all of the deposits of Eastside Commercial Bank, Community & Southern Bank agreed to purchase approximately $104.7 million of the failed bank's assets. In a separate transaction, the FDIC will enter into an agreement with State Bank and Trust Company, Macon, Georgia, to purchase $42.6 million of Eastside Commercial Bank's loans. The FDIC will retain the remaining assets for later disposition.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $33.9 million.

http://www.fdic.gov/news/news/press/2014/pr14058.html

List of Bank Failures:
http://www.fdic.gov/bank/individual/failed/banklist.html
Leasing News Bank Beat:
http://www.leasingnews.org/Conscious-Top%20Stories/Bank_Beat.htm

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“References—Who Should I Give?”
Career Crossroad---By Emily Fitzpatrick/RII

Question: Can you give me some tips on supplying references?

Answer: Reference checks are often part of a comprehensive employment-screening program, which can also include verification of employment eligibility, e.g. immigration status, credit checks, and background checks. References add to the information that a hiring manager has gathered thus far, e.g. resume on a potential candidate. What the prospective employer finds out from your references should confirm their interest in extending an offer!

The definition of “reference” includes two functions in a job search. According to the Merriam-Webster Dictionary, a reference is “a person to whom inquiries as to character or ability can be made” and is also defined as “a statement of the qualifications of a person seeking employment or appointment, given by someone familiar with the person.

According to the Society for Human-Resource Management (SHRM) survey, 76 percent of organizations conduct reference checks for job candidates. The survey defined “reference background checks” as verification of information provided by a job applicant or communication with people regarding the job applicant.

The first step is identifying who you should consider to be your references.

Selecting Your References

Generally, a potential employer will want at least two of your references to be former employers. The advantage of preparing your references is that you can provide the “best” references, and you can present them in the order you would like to have them contacted. That does not guarantee that the prospective employer will not contact people who aren’t on your reference list.

You will want to select 3-7 individuals to be your “preferred” references. These individuals may be current/former managers or supervisors, co-workers, peers, or team members, current/former customers of the company, vendors or suppliers, and people you have supervised. If you do not have current work experience, it can be members of committees you volunteer with, or pro bono clients. If you have recent educational experience, you can also ask professors, faculty members, and advisors.

Select references that know your work well. You want someone who has seen you in action and can speak to your abilities. It is better to have someone who can speak to your skills and accomplishments than a “big name” on your list of professional references. If someone seems hesitant to serve as your reference, ask someone else. 

There are a couple of reasons to consider including “personal” references. These individuals meet the criteria of providing “character” references. A personal reference should know you well, and have known you for at least five years; they can include business acquaintances, coaches, and community leaders. 

Start Contacting Your References Early
The best time to start thinking about your references is when you are putting your resume together. You should not wait until you’re called in for interviews to contact people you want to use as references.

It can take some time to track down and reach references, and obtain their contact information. You do not want to try to do that while you are researching and preparing for a job interview. Additionally, having your references ready when requested shows professionalism. If your goal is to get a job, you should be prepared to provide references when asked. 

IF employed, be careful of letting too many people know of your new career search (contact us for advice on handling this scenario).

Emily Fitzpatrick
Sr. Recruiter
Recruiters International, Inc.
Phone:  954-885-9241
Cell:  954-612-0567
emily@riirecruit.com
Invite me to Connect on LinkedIn
www.linkedin.com/pub/emily-fitzpatrick/4/671/76
Also follow us on Twitter #RIIINFO

Career Crossroads Previous Columns
http://www.leasingnews.org/Conscious-Top%20Stories/crossroad.html

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Leasing Industry Help Wanted

 

Collector, Atlanta, GA Experienced, calling 11-90 day delinquent customers, assisting Asset Re-marketer with delinquency reporting, weekly reporting to home office. Sales, Chicago, Atlanta Work out of main office and satellite. Heavy phone sales calling on both independent dealers and end users (cold/warm calling), marketing, weekly reporting to management. Outside territorial salespeople will also be considered. Contact: Michael Testa 312-881-3133 mtesta@secondcityleasing.com www.secondcityleasing.com Financing for Commercial Truck & Trailer, Exotic, High Line, Vintage & Classic Automobiles, Taxi, Livery & Paratransit

 

Leasing Operations Manager San Antonio, Texas Leadership role in building a team focused on credit, documentation and funding functions for a dynamic high growth business operating in both captive and non- captive lift truck markets. Click here for full description. Contact: Monet Pitts, HR Manager mpitts@minercorp.com flexxrl.com Quality Controlled Material Handling Equipment Rent, Finance, or Lease up to 84 months, Maintenace, too.

 

For information on placing a help wanted ad, please click here:
http://www.leasingnews.org/Classified/Hwanted/Hwanted-post.htm

Please see our Job Wanted section for possible new employees. 

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Financial and Sales Training 
(For our "Lease School/Franchisors" list, please click here)

These individuals act as a consultant in 75% or more of their main business, actually training staff or individuals of a leasing company. These are not schools or franchisors, which can be viewed by clicking here.

Winders Consulting Co., Inc.	Selling Up TM
Institute For Personal Developement	Teichman Financial Training
Adrian Miller	Wheeler Business Consulting, LLC

Several hold classes, and most will travel to their client's premise.

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Leasing 102
by Mr. Terry Winders, CLP

 

Purchase Money Security Interest (PMSI)

We usually file a UCC-1 Financing statement to protect our leased asset. However, a UCC-1 is a requirement of Article 9, which is a legal code for lending, not leasing. Transactions that do not qualify as leases, even though they are on lease documents, will be judged as Article 9 leases intended as a security. This will not always be treated in this manner, as often in a bankruptcy court, the judge will treat the transaction as a lease and allow the lessor to take possession of the personal property, if there is not a blanket lien.

It is hard to establish ownership without a title, so Article 9 has created a system to protect lenders by establishing a procedure where the lender can file a financing statement (UCC-1), and file it in the State where the company has filed its business papers.

Whoever files the first lien has first right to the asset in a default. If the balance is received, then the remaining balance is given to the next lien holder.

There are two kinds of liens. A lien filed on a specific list of asset, or a blanket lien on all the borrowers assets. Most banks prefer to file blanket liens. If a borrower replaces an asset, the blanket lien covers the new purchase.

When the lease transaction is an Article 9 deal, then the lessor needs to file a UCC-1.  The problem then is how do you obtain preference over a filed blanket lien? Article 9 provides an additional lien filing, often called a “Purchase Money Security Interest.”  If the lender/lessor provides the money for the lessee to obtain the equipment, and files the UCC within 20 days of the lessee taking possession, the lessor then has preferential treatment over the blanket lien holder who files after the specific filing.

To prove when the lessee took possession, you should get a copy of the delivery slip, often called a “Bill of Lading, often signed by
the lessee or its designee when the first piece of the equipment is delivered.  A bill of lading is a document issued by a carrier which details a shipment of merchandise and gives title of that shipment.  It
is important to verify that the UCC lien was filed within the 20 day limit of delivery. If not, you need to get a subordination agreement from each blanket lien holder that states your lien comes before theirs.

One of the problems of asset protection is the lack of knowledge by the public of the UCC liens. In addition, if a company filed its papers in a faraway State, the public would have a hard time discovering the State in which to search for liens. The search should definitely be made where the company has filed its business papers.

To give notice to the public that the equipment is owned by a lessor and not the company in possession thereof, it is sometimes prudent to attach to the equipment labels or stickers with the lessor’s name and address with a statement that the equipment cannot be removed without their permission.

A filing is good for 60 months which means that if your transaction terminates early or in fewer than 60 months, you have to release the lien.  A UCC-3 is utilized to release the lien.  I also recommend issuing a "Bill of Sale."  Many companies have a fee written into their lease contract to cover the cost of the UCC-3 and creating a "Bill of Sale." 

There is the issue of keeping the lien active, if the residual or any other amounts owing, are not completed within the 60 month window
of the filing.  Of course, you can always renew the filing without the consent of the lessee or borrower before expiration. In many states, you just check a box to renew it.  No need to re-write it. You can even do it online in most states.

Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty years and can be reached at terrywinders11@yahoo.com or 502-649-0448.
He invites your questions and queries.

Previous #102 Columns:
http://www.leasingnews.org/Conscious-Top%20Stories/Leasing_102/Index.htm

 

Mr. Terry Winders available as a consultant regarding assisting attorneys in resolving disputes or explaining procedures or reviewing documents as utilized in the finance and leasing industry. He is the author of several books, including DVD's, as well as weekly columnist to Leasing News. He also performs audits of leasing companies as an expert on documentation, and has acted as an expert witness on leasing for litigation in legal and tax disputes, including before the IRS. He also has taught the senior bank examiners, how to review a bank leasing department, for the Federal Reserve in Washington D.C. and has trained the examiners for the FDIC on how to prepare a lease portfolio for sale. 502.649.0448/terrywinders11@yahoo.com

(This ad is a “trade” for the writing of this column. Opinions
contained in the column are those of Mr. Terry Winders, CLP)

Notes on Purchase Money Security Interests
by Tom McCurnin, Leasing News Legal Editor

Purchase Money Security Interest (“PMSI”) is an exception to the “first in time is first in line” doctrine under the UCC. A PMSI is automatically perfected without filing for a period of twenty (20) days from possession of the goods. 

When that 20 days starts is debatable, but physical control of the goods is the biggest factor. For equipment which was required to be assembled, there are many cases which hold the 20 days does not start until the equipment is assembled and working.

While the creditor has a 20 day reprieve to file its UCC, there is no reason why it should wait. If filed before the debtor received possession, the UCC is still effective.

PMSIs usually start and end with a three-party purchase order, in which the creditor agrees to fund the purchase with the consent of the borrower and vendor, and the equipment is delivered to the borrower, but is titled in the name of the creditor, so the creditor has all the rights in the collateral and the borrower has none. Large acquisitions are structured with either an escrow or a letter of credit, so the vendor is not paid until the goods are actually delivered and in the possession of the borrower.

A PMSI from an equipment dealer will not protect the creditor from losing the security interest to a buyer in the ordinary course of business. Creditors that finance dealerships need to understand that inventory fluctuates and the collateral at the dealership lot today may be gone tomorrow, and the creditor will have lost its security interest. This is why, even with a PMSI, creditors that finance equipment dealers usually employ third parties to do site inspections daily, weekly, or monthly and require the dealership to submit reports of purchases and sales in a similar time frame.

PMSIs in inventory require special attention, especially if there is a senior security interest in the same collateral. The UCC makes an exception to inventory financing, and a junior secured lender can finance inventory for a borrower subject to a senior security interest if the junior creditor sends a notice to the senior secured as to the date of the security interest, inventory description, the name of the debtor, and the name of the secured creditor.

Tom McCurnin is a partner at Barton, Klugman & Oetting
in Los Angeles, California.

Tom McCurnin
Barton, Klugman & Oetting
350 South Grand Ave.
Suite 2200
Los Angeles, CA 90071
Direct Phone: (213) 617-6129
Cell (213) 268-8291
Email: tmccurnin@bkolaw.com
Visit our web site at www.bkolaw.com

 

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Secured Lender Loses Security Interest in Two Cranes
Which Are Sold Under its Nose

By Tom McCurnin  
Leasing News Legal News Editor   

Creditors That Make Purchase Money Security Interests Mistakenly Think That a PMSI Is An Unbeatable Lien. Here, Lender did not file PMSI for One Crane and Lost to Buyer in the Ordinary Course of Business. For Second Crane, Creditor Was Unaware That Borrower Did Not Yet Have Possession of Second Crane When It Made Its Second Advance

Liebherr Crane

Financial Federal Credit, Inc. v. Crane Consultants, LLC 2014 WL 1883811 (W.D.N.Y. 2014
“Vigilantibus et non dormientibus jura subveniunt”—Latin for “the law aids the vigilant and not the indolent”

Today’s case demonstrates what happens when a creditor doesn’t plan ahead and lets events roll by, seemingly oblivious to what is going on around it. In this case, the result was the creditor advanced $1.1 million dollars, ostensibly secured by two cranes, and ended up with nothing.

The facts are super-complicated, so I’ll take some liberties with the facts to simplify things

Financial Federal extended credit to CraneCon, a crane dealer, to enable it to purchase a certain crane (“the Liebherr crane”), in the amount of $660,750 from supplier Crane Rigging. At the same time, as generally part of the same transaction, the Liebherr crane was under contract to sell to Ramar for $775,000. As part of the same general transaction, Ramar agreed to sell to CraneCon another crane, called the “Tadano crane” for $450,000, documented through a promissory note. This two part transaction was memorialized by a purchase order. The record is silent whether the creditor had a copy of the purchase order, but presumably did have one.

Financial Federal loaned CraneCon $400,750 to acquire the Tadano crane as well. Financial Federal did not file a specific lien on the Liebherr crane, but did file one on the Tadano crane. Financial Federal apparently relied on its blanket security interest for the Liebherr crane. Financial Federal did not escrow the monies, use a letter of credit, or retain a floor plan inspector to insure the equipment was received by the borrower before the monies left FinFed.

Part of the deal materialized, and part of the deal, blew up.   The first part of the deal went through, and CraneCon acquired the Liebherr Crane and re-sold it to Ramar, which paid the proceeds to CraneCon. So far, so good. But CraneCon defaulted on its purchase of the Tadano crane and the note to Ramar, even though it had the money from the Liebherr crane and had Financial Federal’s advance. Ramar kept the Tadano crane and never parted with possession of it.

When CraneCon defaulted on Financial Federal’s loans/contracts, FinFed sued Ramar claiming a security interest in both cranes, the Liebherr crane and the Tadano crane.

Ramar defended the action and two positions. For the Liebherr crane, Ramar claimed it purchased the crane from CraneCon, a dealer in cranes, and therefore was a buyer in the ordinary course of business. This UCC provision allows ordinary people who buy goods from a dealer, without knowledge of the security interest, to take the equipment free of the senior security interest.

Why Financial Federal, which presumably had a copy of the purchase order, allowed the crane to be shipped out of possession of CraneCon while the loan was outstanding, and without a security interest from Ramar, remains a mystery.

On the Tadano crane, Ramar argued that CraneCon never had possession or delivery of the crane, so any security did not “attach.”  Why Financial Federal parted with $400,750 without assuring itself that the crane was in the possession of CraneCon also is a mystery.

The United States District Court for the Western District of New York heard competing summary judgments by Financial Federal and Ramar. The Court ruled against Financial Federal and for Ramar on both counts.

First, with respect to the Liebherr crane, the Court agreed with Ramar that Ramar purchased the crane, from a dealer, and in the ordinary course of CraneCon’s business.

Although FinFed argued that the deal was so squirrely (there was a deferred buy back provision) that it couldn’t have been “in the ordinary course of business,” depositions of the parties seemed to establish that the deal, while a bit complicated, was not out of the ordinary, and was used by CraneCon before.

Neither Ramar’s nor CraneCon’s principal had knowledge of the FinFed blanket lien which would arguably lien the Liebherr crane. Why FinFed did not have CraneCon (or Ramar) pledge a specific security interest in the Liebherr crane, take a security interest by assignment of the purchase order, or otherwise communicate to Ramar remains a mystery. Perhaps it assumed that things would go smoothly and there would be no need for a “Plan B.” So, the Court ruled that Financial Federal lost its security interest to Ramar, as a buyer in the ordinary course of business.

With respect to the Tadano crane, the Court noted that the sale never took place--- and CraneCon never had an interest in the crane.

While Financial Federal argued that CraneCon had rights vis-à-vis the purchase order, that transaction never took place. In order for a security interest to be perfected, the security interest must “attach” under UCC § 9-203. Attachment generally means that the debtor has rights in the collateral, usually by possession. Here, CraneCon neither paid for the Tadano crane, nor received possession of it. All it had, by way of an interest, was an unperformed promissory note. Control is an essential element. So, the Court concluded that Financial Federal never had a security interest, even though it filed a UCC-1, because its debtor never had an interest in the crane.

Financial Federal then argued that the Tadano crane was part of CraneCon’s inventory, thus, its blanket security interest did attach. But the Court noted that the definition of “inventory” seems to require that CraneCon take possession of the crane, a fact which never occurred. So Financial Federal lost its security interest in the second crane, because its borrower never held possession of it.

What are the lessons here for equipment lessors?

•  First, these were obviously two purchase money security interests, but the lessor treated them like an inventory line of credit. Perhaps $660,750 was enough to warrant extra scrutiny, but why weren’t the funds escrowed until CraneCon had possession? 

•  Second, I would hope that before parting with $1.1 million dollars, the lessor had a full set of documents as to what was going to happen to the two cranes. If so, why not enter into a four way agreement, between the Crane Rigging, CraneCo, Ramar and the lessor?  This way, Ramar would agree to pay Financial Federal, not CraneCo.

•  Third, any time a creditor finances inventory of a dealer, the creditor is at risk for that collateral to a buyer in the ordinary course of business. For that reason, most car floor financings call for daily hands-on monitoring of the vehicles that get purchased and that are in possession of the borrower. The events in this case occurred over almost a year, while the creditor was apparently asleep at the switch. Why the lessor didn’t know the crane was delivered and re-sold out from under its nose remains a mystery to me.

The bottom line to this case is that if the lessor is financing purchase money equipment and inventory to a dealer, extra precaution and safeguards are needed. The law protects the vigilant, not those that sleep on their rights.  

Financial Federal Case (12 pages)
http://www.leasingnews.org/PDF/FinancialFederalCase_72014.pdf

 

Tom McCurnin is a partner at Barton, Klugman & Oetting
in Los Angeles, California.

http://www.leasingnews.org/photos/Tom_sig.jpg
Tom McCurnin
Barton, Klugman & Oetting
350 South Grand Ave.
Suite 2200
Los Angeles, CA 90071
Direct Phone: (213) 617-6129
Cell (213) 268-8291
Email: tmccurnin@bkolaw.com
Visit our web site at www.bkolaw.com
Previous Tom McCurnin Articles:
http://www.leasingnews.org/Conscious-Top%20Stories/leasing_cases.html

 

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CLP Study Session This Wednesday, Chicago

The Institute for Leasing Professionals 2 day program is a comprehensive education program designed by equipment leasing and financing professionals. It is a 16-module course that covers the most important subjects in the equipment leasing and financing profession.

Chicago ILP: July 23-24th
Location: ECS Financial Services
CLP Exam: July 25th
Information:
http://www.leasingnews.org/PDF/ChicagoLPCourse_2014.pdf

California ILP: August 8-9th
Location: Banc of California
CLP Exam: August 10th
Information:
http://www.leasingnews.org/PDF/SouthernCaliforniaLPCourse_2014.pdf

Washington ILP: August 12-13th
Location: Financial Pacific Leasing
CLP Exam: August 14th
Information:
http://www.leasingnews.org/PDF/WashingtonLPCourse_2014.pdf

Maryland ILP: October 10-11th
Location: FSG Capital
CLP Exam: October 12th
Information:
http://www.leasingnews.org/PDF/MarylandLPCourse_2014.pdf

For additional Information:
Reid Raykovich, CLP - Executive Director
(206) 535-6281 - direct
reid@clpfoundation.org

Why I Became a CLP
http://www.leasingnews.org/CLP/Index.htm

 

((Please Click on Bulletin Board to learn more information))
(Leasing News provides this ad “gratis” as a means
to help support the growth of Lease Police)

 

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Top Stories July 15—July 17
(You May Have Missed One)

Here are the top stories opened the most by readers:

(1) Archives--July 15, 2009
Most Influential Women in Leasing
http://leasingnews.org/archives/Jul2014/7_15.htm#archives

(2) Who is Financing the Other Four?
by Christopher Menkin
http://leasingnews.org/archives/Jul2014/7_17.htm#who

(3) New Hires---Promotions in the Leasing Industry
http://leasingnews.org/archives/Jul2014/7_17.htm#hires

(4) Leasing 102 by Mr. Terry Winders, CLP
Lease Pricing
http://leasingnews.org/archives/Jul2014/7_15.htm#lease_pricing

(5) Fed’s Operation Choke Point Goes After Pay Day Lenders and Other “Undesirable Customers”
By Tom McCurnin, Leasing News Legal News Editor
http://leasingnews.org/archives/Jul2014/7_15.htm#fed

(6) Microfinancial Reports $2.5 Million 2nd Quarter Profit
Approves 410 New Dealers and Brokers
http://leasingnews.org/archives/Jul2014/7_17.htm#micro

(7) Business Solar Panel Financing
by Thomas L. Cadle, CLP
http://leasingnews.org/archives/Jul2014/7_17.htm#solar

(8) Archives—July 17, 2000
BULLETIN BOARD
http://leasingnews.org/archives/Jul2014/7_17.htm#archives

(9) Iowa Court Upholds the Use of Dragnet Clause
By Tom McCurnin, Leasing News Legal News Editor 
http://leasingnews.org/archives/Jul2014/7_17.htm#iowa 

(Tie) (10) Dakota Financial saves $14,400 in document storage costs
after deploying Office 365
http://leasingnews.org/archives/Jul2014/7_15.htm#dakota

(Tie) (10) House Passes Bonus Depreciation Bill
http://www.accountingweb.com/article/house-passes-bonus-depreciation-bill/223603

 

Black Labrador
Murray, Utah  Adopt-a-Dog

MAJOR - ID#A078196

I am a neutered male, black and white Labrador Retriever mix. The shelter staff thinks I am about 1 years and 0 months old. I have been at the shelter since Jul 10, 2014.

Shelter Staff made the following comments about this animal:

I CAME TO THE HUMANE SOCIETY OF UTAH FROM ANOTHER SHELTER. FORTUNATELY I HAVE BEEN GIVEN A CHANCE FOR A NEW LIFE!

ALTHOUGH MY HISTORY IS UNKNOWN I HAVE DONE WELL WITH MANY DOGS HERE IN DAWGVILLE.

REGULAR MENTAL STIMULATION (TRAINING) & PHYSICAL EXERCISE WILL KEEP ME HAPPY & HEALTHY.
I WOULD ALSO BENEFIT FROM A SOLID, DAILY ROUTINE & PROPER CRATE TRAINING. THIS WOULD ALSO ENSURE HOUSE MANNERS IN MY NEW HOME.

IF YOU THINK WE'RE A MATCH, PLEASE BRING YOUR CURRENT CANINE COMPANION & ENTIRE FAMILY TO THE HUMANE SOCIETY OF UTAH TO MEET ME TODAY!

DAWGVILLE "THE WAIT IS OVER, ROVER" -
TINY TOWN @THE HUMANE SOCIETY OF UTAH
4242 SOUTH 300 WEST
MURRAY, UTAH 84107

(801) 261-2919
UTAHHUMANE.ORG

.

Adopt a Pet
http://www.adoptapet.com/

 

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Classified ads—Asset Management

Leasing Industry Outsourcing
(Providing Services and Products)

Asset Management: Atlanta, GA premier provide accounts receivable management functions from 3rd Party contingency collections to Portfolio Purchasing. Contact George Elliott, National Account Manager. 678-694-9063, westassetmanagement.com	Asset Management: Boston, MA Nationwide appraisals, remarketing, audits, inspections and more! Over 15-years industry experience and dedicated to deliver personal, prompt, professional services.  Call Chris @ 508-785-1277  Email: chris@dovermanagementgroup.com
Asset Management: Minneapolis, MN NetSentric provides services to leasing companies: Inspection, Appraisals, Auditing, Warehousing, Repossession, Asset Management, Repairs, Remarketing and Field Service for Electronics and Computing Technology. Email: jcahill@netsentricinc.com	Asset Management: Monroe, NC Recover a greater return on your investment.  We specialize in the woodworking, pallet, sawmill and forestry industries.   Carolinamachinerysales.com/  Melinda Meier (704)288-1904 x103
Asset Management: Nationwide  BUYER/LENDER BEWARE. Don't sign anything until Collateral Verifications Inc. goes onsite, knocks on the door and gets the facts. http://www.i-collateral.com Email: mark@i-collateral.com	Nationwide  Seasoned and fair priced workforce is at your service for all lease collections, repossessions, and asset liquidations, appraisals.  Call Nassau Asset Management 800-462-7728  dcastagna@nasset.com
Asset Storage/Re-Marketing: Ohio & surrounding states. Providing no cost warehousing, condition reports, digital photos and remarketing of off-lease forklifts & industrial equipment. NAFTA wide dealer network. Email to GCochran@OhioLift.com	Asset Management Melville, New York Auctions, Appraisals, National Repossessions.  ALL asset classes. 20+ year team works for you. Spend less, Net More… Fast! Ed Castagna 516-229-1968ecastagna@inplaceauction.com
	Asset Management: Global Specializing in Semiconductor and Electronic Test Equipment collateral. Lender services include Consignment Sales, Remarketing, Portfolio Purchases, Inspections, De-installation, Repairs and Warehousing.  testequipmentconnection.com Email
Bulldog Asset Management provides recovery and remarketing services with a difference. Contingent repos, free storage and industry experts to remarket. Email:Jamie@bulldogasset.com  www.bulldogasset.com	Asset Management: Portsmouth, NH Unique approach improves results, keeps costs down. Repossession, Storage, Inspection, Legal, Appraisal, Transport, Remarketing. Free advice and resources. Call 855.EENGINE  www.equipmentengine.com/

All "Outsourcing" Classified ads (advertisers are both requested
and responsible to keep their free ads up to date:
http://www.leasingnews.org/Classified/Outsourcing/Outsourcing.htm

How to Post a free "Outsourcing" classified ad:
http://www.leasingnews.org/Classified/Outsourcing/Outsourcing-post.htm

 

John Kenny  Receivables Management • End of Lease Negotiations & Enforcement • Fraud Investigations • Credit Investigations • Asset Searches  • Skip-tracing • Third-party Commercial Collections john@jkrmdirect.com | ph 315-866-1167| www.jkrmdirect.com

(Leasing News provides this ad as a trade for investigations
and background information provided by John Kenny)

  

News Briefs----

Huntington Bank sees 39 percent increase in auto loans; commercial loans increase too
http://www.cleveland.com/business/index.ssf/2014
/07/huntington_bank_sees_39_percen.html

In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates
http://dealbook.nytimes.com/2014/07/19/in-a-subprime-bubble-for-used-cars-unfit-borrowers-pay-sky-high-rates/

U.S. Bancorp Seeing Stable Credit and Early Signs of Lease and Loan Growth
http://seekingalpha.com/article/2320375-u-s-bancorp-seeing-stable-credit-and-early-signs-of-loan-growth  

Export-Import bank renewal debated
http://www.greenvilleonline.com/story/money/business/2014/07/18/sc-politicians-debate-merits-renewing-export-import-bank/12872435/

General Electric's (GE) CEO Jeff Immelt on Q2 2014 Results
- Earnings Call Transcript
http://seekingalpha.com/article/2323025-general-electrics-ge-ceo-jeff-immelt-on-q2-2014-results-earnings-call-transcript

Dell Begins Accepting Bitcoin on Its Website
http://blogs.wsj.com/digits/2014/07/18/dell-begins-accepting-bitcoin-on-its-website/?mod=ST1

Northwest Wildfires: More than 940,000 acres burn in Oregon and Washington
http://www.oregonlive.com/pacific-northwest-news/index.ssf/2014/07/northwest_wildfires_more_than.html#incart_m-rpt-1

James Garner, Witty, Handsome Leading Man, Dies at 86
http://www.nytimes.com/2014/07/21/movies/james-garner-actor-dies-at-86.html

James Garner's key roles
(My father wrote scripts for many of these series with Garner)
http://www.latimes.com/entertainment/la-et-james-garner-obit-gallery-20140721-story.html#page=1

Leasing Operations Manager San Antonio, Texas Leadership role in building a team focused on credit, documentation and funding functions for a dynamic high growth business operating in both captive and non- captive lift truck markets. Click here for full description. Contact: Monet Pitts, HR Manager mpitts@minercorp.com flexxrl.com Quality Controlled Material Handling Equipment Rent, Finance, or Lease up to 84 months, Maintenace, too.

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--You May Have Missed It

Golfer gets luxury car he desired all along for hole-in-one at Granite Bay charity event
http://www.sacbee.com/2014/07/17/6562992/golfer-gets-luxury-car-he-desired.html

[headlines]
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SparkPeople--Live Healthier and Longer

50 Easy Ways to Cut 100 Calories
Lose Weight Without Deprivation
http://www.sparkpeople.com/resource/nutrition_articles.asp?id=1183

[headlines]
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Baseball Poem

He approaches the plate,
ponderous,
swinging smoothly
in slow motion
knowing his choice is simple:
swing or not.

As he paws
the back line of the batter's box,
matching concentration and stare
with the pitcher,
he knows
indecision
or
hesitation
makes failure likely.

Pitcher rocks.

Batter waits.

Then, in the time it takes
a happy heart to beat,
decides.

[headlines]
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Sports Briefs----

British Open 2014: Rory McIlroy Wins Third Major Championship
http://www.nytimes.com/2014/07/21/sports/golf/british-open-2014-rory-mcilroy-wins-third-major-championship.html?emc=edit_na_20140720&nlid=31282772

Cowboys training camp preview: The five biggest concerns as camp begins
http://www.dallasnews.com/sports/dallas-cowboys/headlines/20140719-cowboys-training-camp-preview-the-five-biggest-concerns-as-camp-begins.ece

A position-by-position analysis of the Seahawks
http://seattletimes.com/html/seahawks/
2024114347_seahawks20xml.html?cmpid=2628

Hometown roots run deep for Anquan Boldin, 49ers’ fierce wide receiver
http://www.sacbee.com/2014/07/20/6568271/anquan-boldins-hometown-roots.html

[headlines]
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California Nuts Briefs---

Local investment fund accused of defrauding investors out of $700 million
http://www.contracostatimes.com/news/ci_26181046/local-investment-fund-accused-defrauding-investors-out-700

SF Bay Area rents continue their climb
http://www.contracostatimes.com/business/ci_26152150/bay-area-apartment-rents-continue-relentless-rise

Legal battle over Drakes Bay Oyster Co. is not quite over
http://www.sfgate.com/bayarea/article/Legal-battle-over-Drakes-Bay-Oyster-Co-is-not-5631515.php

Bella Italia: A Tribute to Sophia Loren
http://www.sfgate.com/entertainment/slideshow/Bella-Italia-90046.php

 

[headlines]
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“Gimme that Wine”

http://www.youtube.com/watch?v=EJnQoi8DSE8

How the world’s best wine was ‘kidnapped’ for a $1.3M ransom
http://nypost.com/2014/07/19/how-the-worlds-best-wine-was-kidnapped-for-a-1-3m-ransom/

Launch of First National Online Directory of Canada's Wineries
http://www.marketwired.com/press-release/launch-of-first-national-online-directory-of-canadas-wineries-1930817.htm

Was Parker right about first growth pricing?
http://www.thedrinksbusiness.com/2014/07/was-parker-right-about-first-growth-pricing/

Free Mobile Wine Program
http://leasingnews.org/archives/Feb2010/2_26.htm#mobile

Wine Prices by vintage
http://www.winezap.com
http://www.wine-searcher.com/

US/International Wine Events
http://www.localwineevents.com/

Winery Atlas
http://www.carterhouse.com/atlas/\

Leasing News Wine & Spirits Page
http://two.leasingnews.org/Recommendations/wnensprts.htm