credit manager webinar february 13, 2009. overview »security interests »mechanic’s liens...
TRANSCRIPT
Credit Manager Webinar
February 13, 2009
Overview
» Security Interests» Mechanic’s Liens» Bankruptcy» Additional Lease Credit Criteria
Credit Manager Webinar | Overview
Credit Manager Webinar | February 13, 2009
Security Interests
» Three keys –– 1. Security Agreement
– Standard YESCO Agreement– Customer Contract Clause
– 2. Attachment– Collateral exists - we make a sign
– 3. Perfection– UCC-1– Fixture Filing
Credit Manager Webinar | Security Interests
Credit Manager Webinar | February 13, 2009
Security Interests
» Perfection– A matter of PRIORITY– Purchase Money Security Interest (PMSI)
– 20 day rule
– We should file immediately upon the acceptance of the agreement.
Credit Manager Webinar | Security Interests
Credit Manager Webinar | February 13, 2009
Security Interests – Perfection Continued
» UCC-1 versus Fixture Filing» Is a sign a fixture?
– Maybe …– Massive Pylon?– Simple letters?– Monument sign?
– Adaptation, annexation, intent (in NV)– Fixtures in NV for sales tax purposes
Credit Manager Webinar | Security Interests
Credit Manager Webinar | February 13, 2009
Current Procedure
Credit Manager Webinar | Security Interests
Credit Manager Webinar | February 13, 2009
StateContract Type
ContractAmount
File UCC-1?
File Fixture Filing?
Nevada
Tax LeaseFinance LeaseConditional Sale
Less than $100K
NoAs deemed necessary
by Credit Manager
Nevada
Tax LeaseFinance LeaseConditional Sale
More than $100K
No Yes—Mandatory
All Except NV
Tax LeaseFinance LeaseConditional Sale
Less than $100K
Yes—MandatoryAs deemed necessary
by Credit Manager
All Except NV
Tax LeaseFinance LeaseConditional Sale
More than $100K
Yes—Mandatory Yes—Mandatory
New Procedure
Credit Manager Webinar | Security Interests
Credit Manager Webinar | February 13, 2009
StateContract Type
ContractAmount
File UCC-1?
File Fixture Filing?
Nevada
Tax LeaseFinance LeaseConditional Sale
Less than $75K
Yes, unless determined
unnecessary by credit manger
Yes, unless determined
unnecessary by credit manger
Nevada
Tax LeaseFinance LeaseConditional Sale
More than $75K
Yes, unless determined
unnecessary by credit manger
Yes—Mandatory
All StatesExcept NV
Tax LeaseFinance LeaseConditional Sale
Less than $75K Yes—MandatoryAs deemed necessary
by Credit Manager
All States Except NV
Tax LeaseFinance LeaseConditional Sale
More than $75K Yes—Mandatory Yes—Mandatory
All States Cash SaleYes—if significant $ remains owing
after delivery
Mandatory—if more than $75K remains owing after delivery
Mechanic’s Liens
» Optional – use as needed.» General lien against all real estate
– Not specific to our sign (unlike security interest)– No right of repossession (unlike security interest)– No “first priority” like a PMSI
» Upside– Can leverage payment– Can provide additional equity as security in bankruptcy
(will discuss later)
» Downside– Is a sign “real property?”– Unlikely to foreclose and receive actual benefit
» NEVER USE “IN LEIU OF” SECURITY INTEREST
Credit Manager Webinar | Mechanics Liens
Credit Manager Webinar | February 13, 2009
Bankruptcy
» Secured Claims– Secured creditors are generally paid up to
the value of the collateral, the remainder is an unsecured claim
– Valuation is complex
» Preference Payments– Payments made within 90 days in some
cases can be brought back into the bankruptcy estate
– Exception for payments “in the ordinary course of business”
– Granting a security interest can be considered a “payment”
Credit Manager Webinar | Bankruptcy
Credit Manager Webinar | February 13, 2009
Bankruptcy Continued
» Executory Contracts and Unexpired Leases– Executory contract - performance under the
contract still remains – generally excludes debt payments
– Maintenance agreement – probably yes– Tax lease – probably yes– Outdoor Advertising – probably yes– Finance Lease ??? Maintenance probably yes,
lease portion probably not – result is uncertain– Trustee can accept or reject these contracts,
if rejected, then we have an unsecured claim for the breach, if we do not have a security interest or mechanics lien.
Credit Manager Webinar | Bankruptcy
Credit Manager Webinar | February 13, 2009
Additional Lease Credit Criteria
» All leases >$500k to be approved by corporate
» 1.25 Minimum Cash Flow Coverage Ratio– (Net Income + Depr. & Amort.) / (Current
portion of Long-Term Debt + Annual Lease Expense)
» Cash Sale Price must be less than 25% Equity
Credit Manager Webinar | Additional Lease Credit Criteria
Credit Manager Webinar | February 13, 2009