Maintain your old Siemens Hipath system

Dodging Leasings Grim Reaper: Navigating a Payment Default

In her third Harry Potter novel, ?The Prisoner of Azkaban?, J.K. Rowling introduces a silent mysterious clan of spiny, cloaked creatures capable of siphoning off happiness and all good thoughts from anyone in their presence. Extended exposure to these scabby grim reapers, called Dementors, resulted in madness or death for even the most joyful individuals. In the world of equipment leasing, the closest things to Dementors are lessors who lose confidence in defaulting lessees. If your firm faces imminent payment default, there are several actions you can take to improve your chances of navigating this unfortunate situation.

As in most situations that can spin out of control, effective communication between lessee and lessor is extremely important. At the start of the lease, you are primarily concerned with obtaining flexible, cost effective equipment financing. The lessor?s primarily objective is to originate a profitable lease transaction. Once a payment default is in the offing, the primary concerns of both parties change. You now focus on taking actions to guarantee survival, while the lessor seeks protection and recovery of the lease investment. That being said, it is very important that you appreciate the lessor?s concerns when you are planning a recovery and when communicating with the lessor.

As a first step, you should notify the lessor when a payment default seems unavoidable. No one wants to be blindsided by an unexplained delinquency as the first indication of a problem. Most lessors will appreciate your forthright candor in alerting them. Be prepared to give an explanation of the cause of the payment problem, a detailed account of your company?s financial condition, and your plan to correct the situation. If you are able to generate financial projections, they will prove helpful in convincing the lessor to allow you to execute your recovery plan.

Try to stay in compliance with all other terms and conditions of the lease. Most lessors will appreciate your diligence in adhering to the other lease provisions, especially those requiring periodic financial information. Frequent updates will give the lessor confidence that you are cooperating and working with him.

If appropriate, propose a rent reduction in an amount and for a term that will give you an opportunity to recover. Remember, the lessor is primarily interested in how the lease will be repaid and how he will realize the benefit of the bargain negotiated at the outset of the lease. Secondly, he is concerned about his collateral position. Now that a problem has surfaced, he will want protection from a loss on the transaction if your company fails or if equipment repossession becomes necessary. Offer cash flow projections to show how your firm will recover and when you will be able to resume making full rent payments.

If possible, be prepared to offer credit enhancements and an increase in the lease rate to entice the lessor to accommodate you. Credit enhancements are intended to make the lessor feel more secure that he will recover his investment. You may offer additional collateral, a personal guarantee, a pledge of stock or other securities as credit enhancements. To compensate the lessor for the added risk of the defaulted transaction offer a rate adjustment. A rate adjustment might be accomplished by extending the lease term, stepping up the rental after resuming payments, or issuing warrants to purchase stock in your firm.

If you can?t determine the likely duration of the default, you should request a relatively short period of lower payments until you can better evaluated the situation. Be prepared to negotiate the length of the period, the amount of the reduced payments and credit enhancements.

If the default looks hopelessly incurable, you may proceed in number of ways. You can: 1) offer to return the equipment to the lessor and pay the lease balance over an extended time; 2) offer to find a suitable sublease arrangement for the equipment; or 3) see whether the lessor will allow you to keep the equipment and make reduced payments on a month to month basis until you or the lessor can re-market the equipment. If all else fails in working out an acceptable solution with the lessor, it may be time for you to get a skilled attorney involved.

If you are able to reach a mutually acceptable solution, some lessors might require a formal forbearance agreement covering the new understanding. These agreements can take the form of an informal letter of understanding or an extensive legal agreement. The agreement form may depend on the size of the transaction and the preference of the lessor. Most lessors ultimately expect to be compensated for forbearing via a one-time forbearance charge, penalty rental payments or other means. Also, expect to reimburse the lessor for any legal expenses incurred to document a forbearance arrangement.

Most lessors don?t want to take legal action or cause customers hardships that will interfere with recovering their lease investment. This preference is weighted against the prospect of realizing a larger eventual loss by allowing the customer to retain the equipment. It is usually more advantageous for lessors to work with customers if the situation seems salvageable. The less desirable alternative is to go through an expensive and lengthy legal process to foreclose on the lease and attempt to repossess the equipment. Many large lessors have individuals in-house that specialize in managing ?work out? transactions. These specialists usually have had experience with many lessee payment defaults. Their mandate is to get the quickest recapture of the lease investment possible, subject to protecting the investment. If it becomes clear at any time that the lessor plans to take legal action against your firm rather than try to work with you to realize a mutually acceptable solution, get a skilled attorney involved. The attorney can provide you with your legal alternatives and may be able to assist you in negotiating with the lessor.

When your company?s fortunes take a turn for the worst and you have to modify payment terms with your leasing company and other creditors, don?t panic. This is the time to redouble your efforts and to draw up plans to remedy the situation. Early aggressive actions by you to develop solutions will pay great dividends. Make every effort to create and propose plans mutually acceptable to all parties. However, always be prepared seek legal help should grim reapers or Dementors show up at your door.

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.

In The News:

Europe's drought 'on course to be worst for 500 years' amid fears 'situation could worsen'
Tue, 09 Aug 2022 14:41:00 +0100
The drought scorching much of the European Union is set to be the worst endured since the sixteenth century, a senior scientist at the European Commission's (EC) drought service has warned.

Why has the FBI raided Trump's estate - and what are they investigating?
Tue, 09 Aug 2022 09:06:00 +0100
The raid on Donald Trump's Florida estate has stunned his supporters, enemies and observers around the world.

At least eight killed after record rainfall floods Seoul
Tue, 09 Aug 2022 14:00:00 +0100
At least eight people have died after heavy rain hit South Korea's capital - flooding homes, roads and subway stations.

Former international cricket umpire Rudi Koertzen dies after car crash
Tue, 09 Aug 2022 16:04:00 +0100
Tributes have been paid to former international cricket umpire Rudi Koertzen following his death at 73.

Final attempt to save beluga whale in River Seine before it starves to death
Tue, 09 Aug 2022 13:18:00 +0100
Environmentalists will try to move a dangerously thin beluga whale that strayed into the River Seine last week in a final attempt to save its life.



tikatoshop.it

Erfahrungen mit Pallhuber Wein
Agen Bola SBOBET Terpercaya

Travel in comfort and at your leisure with CT Airlink Limousine & Car Service for top quality private transportation and exceptional customer service. We operate Sedans, SUVs & Vans for CT Car Services to covering all Connecticut airports including Car Service from CT to Newark Airport , Mohegan Casino Uncasville CT, Foxwoods Casino Mashantucket CT, Manhattan Cruise Terminal NYC, Brooklyn Cruise Terminal NYC and Bayonne Cruise Terminal NJ. CT Airlink hire licensed and friendly chauffeurs who have in-depth knowledge of the Areas.

Explore An Effective Revolutionary Approach To Traditional Business Financing

For business owners who need working capital now there is... Read More

Venture Leasing: Startup Financing On the Rise

According to Pricewaterhouse Coopers, investment by institutional venture capitalists in... Read More

Getting Your Venture Lease Approved

Each year venture capitalists fund more than 2,500 start-up companies... Read More

Lease Contracts - The Meaning of Joint and Several

When you see the phrase "joint and several" in a... Read More

Basic Things You Should Know About A Lease Purchase Contract

What exactly is a contract?By definition, a contract is an... Read More

Warning - This Lease Might Explode Any Minute

Mike Caringi, owner of a small New Jersey business that... Read More

Terms to Know Before Leasing A Vehicle - Leasing Jargon Simplified

So, you've decided that you want to lease that next... Read More

How Venture Leasing Added Millions To A Startups Equity Value

Craig Berman beamed noticeably after completing his board presentation. Berman,... Read More

Ten Equipment Leasing Tips - Save a Bundle on Your Next Lease

According to the Equipment Leasing Association ("ELA"), U.S. businesses lease... Read More

Ten Ways to Save a Bundle on Your Next Lease

According to the Equipment Leasing Association ("ELA"), U.S. businesses lease... Read More

Venture Leasing - A Smarter Way To Build Enterprise Value

In 2003, venture capitalists and investors dispensed over $18 billion... Read More

Insiders Guide to Snaring the Best Lease Deal

Every year, thousands of business owners and financial managers are... Read More

With a Lease, The Devil Is In The Details

In the last article we looked at a few of... Read More

Increase Your Business Growth and Cash Flow Through Equipment Leasing

"If it can be manufactured, it can be leased." For... Read More

What Happens When the Anchor Tenant Moves and You Are On a Ten-year Lease?

Recently there was an article in the Houston Business Journal... Read More

Equipment Leasing Blunders That Can Cost Your Firm a Mint

Rod McHenry, the financial vice president of a document imaging... Read More

What to Consider Before Leasing a Car

Some people choose to lease a car rather than buying... Read More

The Leverage of the Lease

In today's rapidly changing business environment it makes sense to... Read More

Lease or Buy? That is Always the Question with Car Financing

Leasing is a perfectly viable and legitimate way to finance... Read More

Using Equipment Leasing as a Competitive Weapon

Most great generals know how to design winning battle plans.... Read More

How To Choose An Equipment Leasing Company

Leasing has become a preferred form of equipment financing, accounting... Read More

So You Want to be a Landlord?

The residual income from owning rental properties may bring more... Read More

Pricing Your Apartments

How do you fix a price point for an apartment?... Read More

Interim Rent: Equipment Leasing?s Trap Door

Many lessees enter into lease transactions that they believe are... Read More

Smart Car Leasing for Beginners

Car leasing is extremely popular because it provides an attractive... Read More