Leases & Leasing Information


Warning - This Lease Might Explode Any Minute


Mike Caringi, owner of a small New Jersey business that sells pumps, found himself facing a gut-wrenching dilemma last summer. Should he continue paying $ 1,500 each month for essential telecommunications services he no longer receives and for leased equipment he claims was never installed? Or, should he stop making payments and face a potential lawsuit from the firm that financed the equipment under a 'hell or high water' lease? Mr. Caringi's company is one of several thousand small companies around the country reeling from the bankruptcy of Norvergence, a reseller of telecommunications and Internet services. At the core of the quagmire facing Mr. Caringi and others is that Norvergence succeeded in getting customers to sign separate lease and service contracts that provided its services.

When Norvergence abruptly shut its doors, it left thousands of its customers scrambling to replace telephone and Internet services while they were obligated to shell out over $ 200 million in lease payments to Wells Fargo Financial, CIT and 30 other leasing companies over the next five years.

How can you protect your company from being victimized in a similar situation? Certainly, most transactions involving equipment leased in connection with a related service carry some degree of risk. You can reduce that risk by taking certain precautions. First, where possible, avoid leasing equipment when the equipment is proprietary to a service. The chances are that you will be stuck with the equipment if the service provider fails. Make sure that the leased equipment has an underlying value that justifies the lease. By doing a present value calculation of all payments owed under the lease agreement and comparing that value to the fair market value of the equipment, you can see whether the lease value is reasonable.

Check to see whether the equipment is used by similar service providers, in case you need to switch services. Finally, make sure you can resell the leased equipment in the after-market, if necessary. As a last resort, you may be able to cut your losses by having the ability to buy-out the equipment from the leasing company to be resold to someone else.

Perhaps, one of the best protections against getting stuck with service-related leased equipment is to thoroughly evaluate the service provider before proceeding. Make sure the service provider is financially sound and has a long track record of providing excellent service. If possible, ask for and review financial information on the service provider. Do an Internet news search to make sure there are no troubling stories about the service provider. Be partial to services that offer equipment under contracts that tie service and use of the equipment together, such that your obligation to pay is conditioned on the service being provided.

Lastly, since these transactions always carry some risk, make sure that an abrupt interruption in the service will not have a material negative impact on your company or cause financial hardship.

George Parker is a Director and Executive Vice President of Leasing Technologies International, Inc. ("LTI"), responsible for LTI's marketing and financing efforts. A co-founder of LTI, Mr. Parker has been involved in secured lending and equipment financing for over twenty years. Mr. Parker is an industry leader, frequent panelist and author of several articles pertaining to equipment financing.

Headquartered in Wilton, CT, LTI is a leasing firm specializing nationally in direct equipment financing and vendor leasing programs for emerging growth and later-stage, venture capital backed companies. More information about LTI is available at http://www.ltileasing.com.


MORE RESOURCES:
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news


Times of Oman

Abdullah Al Salmi to inaugurate major IFRS workshop
Times of Oman
The other standard IFRS 16 deals with leases. Leasing is a key financial solution enabling companies to use property, plant and equipment without the need to incur large initial cash outflows. Current standard generally require lessees to account for ...



Form 8-K/A WillScot Corp For: Aug 15
StreetInsider.com
The Company's primary business is conducted through operating leases. Leasing revenue from operating leases is recognized in income on a straight-line basis over the lease term. Leasing billings for periods extending beyond month-end or. 19 ...



Malaysia: Leasing - A Guide To Leasing In Labuan
Mondaq News Alerts
Over the years, Labuan International Business and Financial Centre's (Labuan IBFC) leasing sector has grown in tandem with the region's economic growth, as demand for capital equipment has showed no sign of abating in order to meet the demands of a ...



Australia: Leasing update - recent and potential future challenges for landlords
Mondaq News Alerts
IN BRIEF - RETAIL LANDLORDS SHOULD CONTINUE TO BE MINDFUL OF RECENT CHANGES TO NSW RETAIL LEGISLATION AND ALL LANDLORDS GENERALLY WILL NEED TO BE AWARE OF UPCOMING REFORMS IN INSOLVENCY LAW.

and more »


Club Industry

Financing Options for Fitness Studio Owners in Today's Market
Club Industry
Capital Leases – Leasing Equipment to Own. The most common financing option for fitness equipment is a capital lease. The main purpose of a capital lease is to finance the equipment purchase while preserving the owner's working capital. Fitness studio ...



blogs.hbr.org (blog)

Is Rooftop Solar Finally Good Enough to Disrupt the Grid?
blogs.hbr.org (blog)
They are offered either solar leases (leasing the panel and its energy for a fixed periodic payment) from a solar company, power purchase agreements (they purchase each unit of electricity produced by the panel at an agreed upon rate), or solar loans ...

and more »


WyoFile

Mead unfazed by Zinke's sage grouse plan
WyoFile
As the BLM and Forest Service look to revise, and some say weaken, federal plans to protect grouse, Zinke continues to offer more energy leases. Leasing plans this year have provoked pushback and protests, including charges that the 2015 protections ...



United States: Leasing Tips For Commercial Landlords And Tenants: Who Owns The "Fixtures" When The Lease ...
Mondaq News Alerts
Last Updated: August 3 2015. Article by Christopher Tesar · Blank Rome LLP · LinkedIn · Twitter · Facebook. When a lease expires, it is not uncommon for landlords and tenants to dispute what constitutes the landlord's property and what constitutes the ...

and more »


Weingarten Realty Investors' (WRI) CEO Drew Alexander on Q4 2017 Results - Earnings Call Transcript
Seeking Alpha
Weingarten Realty Investors (NYSE:WRI) Q1 2018 Earnings Conference Call April 25, 2018 11:00 AM ET. Executives. Michelle Wiggs - VP IR. Drew Alexander - President and CEO. Steve Richter - EVP and CFO. Johnny Hendrix - EVP and COO. Analysts.

and more »


TIME

Used Car Prices Are Plummeting. Here's Why
TIME
All of those new vehicle purchases and leases have translated to a parallel rise in trade-ins and cars coming off leases. “Leasing has surged in recent years with thousands of those cars coming back to dealerships as used cars,” Michelle Krebs, ...

and more »

Google News

home | site map
© 2007