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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.
Latest News:Site: Yahoo! News Search Results for news Myanmar's Suu Kyi to get family letters, news mags (Reuters via Yahoo! News) Detained Myanmar opposition leader Aung San Suu Kyi has managed to wring small concessions from the ruling generals in the form of letters from her family and some international news magazines, her lawyer said on Friday. SEC Looks Into UAL Stock Scare; Implications For Online News? (CBS News) A ton of digits have been devoted to this in other spots but the SEC's decision to investigate takes it to another level. The backstory: a six-year-old news story about UAL declaring bankruptcy made it into the Tribune-owned Sun-Sentinel 's current news flow, was picked up by a Google (NSDQ: GOOG) News bot and, via a reporter for a newsletter, made it onto Bloomberg News. After a lot of buck ... JCDecaux in talks for News Outdoor Group in Russia (AP via Yahoo! News) French outdoor advertising firm JCDecaux SA said Thursday it is negotiating to buy Russian rival News Outdoor Group from global media company News Corp. JCDecaux and News Corp. in talks to combine outdoor ad groups (International Herald Tribune) The News Corp. chief executive, Rupert Murdoch, has recently expressed nervousness about investments in Russia, where News Outdoor generated the bulk of its revenue last year. News Corp tightens grip on Premiere with new CEO (Reuters via Yahoo! News) Rupert Murdoch tightened his grip on German pay-TV broadcaster Premiere by appointing News Corp executive Mark Williams as CEO in a move to get the company back on track. SEC Looks Into UAL Stock Scare; Implications For Online News? (paidContent.org via Yahoo! Finance) A ton of digits have been devoted to this in other spots but the SEC's decision to investigate takes it to another level. The backstory: a six-year-old news story about UAL declaring bankruptcy made it into the Tribune-owned Sun-Sentinel's current news flow, was picked up by a Google News bot and, via a reporter for a newsletter, made it onto Bloomberg News. Phila. mayor to announce grim budget news (The Philadelphia Inquirer) The Nutter administration is expected to announce grim budget news today, which is all but certain to lead to significant spending cuts - perhaps as high as 10 percent - in some city departments, according to three sources familiar with the budget. DIVA TALK: Chatting with In the Heights ' Mandy Gonzalez Plus News of Fraser, Testa and Bundy (Playbill) News, views and reviews about the multi-talented women of the musical theatre and the concert/cabaret stage. Help News pick Stadium's greatest moment (New York Daily News) The News is marking the countdown to the final game at The House That Ruth Built by reflecting on Yankee Stadium's greatest moments - and we're asking you - the reader - to help us pick out the best of the best. JCDecaux in talks to buy News Corp. billboard unit (AP via Yahoo! Finance) In a deal that would create the world's largest outdoor advertising company, French conglomerate JCDecaux SA said Thursday that it is in talks to buy Russian rival News Outdoor Group from global media company News Corp. Site: news - Google News Fidelity to Roll out New Home Page Providing Real-Time Financial ... - MarketWatch
MORE RESOURCES: Site: Yahoo! News Search Results for leases leasing Profile: NALP of Year Winner Feldman Says, 'Leasing Is about People, not Property' (Multi-Housing News) Thomas Feldman is the proud recipient of the 2008 National Apartment Leasing Professional (NALP) of the Year title from the National Apartment Association Education Institute (NAAEI). Feldman leases apartments at 100 Memorial Drive, a 260-unit building in Cambridge, Mass. He believes, "You really need to make the experience of a site visit more than just a live 'virtual tour.' Gas Leasing Rights (WENY-TV) ALBANY--New York Attorney General Andrew Cuomo is warning landowner's to be careful when they enter into oil and gas leases. Cuomo wants landowners to know their rights. The Attorney General's office is investigating a significant number of complaints. Farmland leasing program Sept. 11 (The Journal-Standard) Landowners looking for information about farm leasing and farm management are invited to a Farmland Leasing Program from 9 to 11 a.m. Thursday, Sept. 11, at the Stephenson County Farm Bureau building, 210 W. Spring St. Cuomo to landowners: Know your rights (The Post-Standard) New York State Attorney General Andrew Cuomo is alerting landowners to know their rights and to beware of "strong-arm tactics" before leasing property to gas exploration companies that are prospecting various counties in the state, including Madison. DNC leases Aspen buses (Vail Daily) ASPEN, Colorado ? The Roaring Fork Transportation Authority will never be accused of throwing Barack Obama under the bus. Vintage Park Developers on leasing: We?re on schedule (Cypress Sun) With ?For Lease? signs posted over many of the store front windows, right now Vintage Park may look like a ghost town. But that?s expected to change. INDECISION '08: Tenant Hesitation Hinders Leasing of New Projects (CoStar Group) Call it the "deer in the headlights" effect. Caught in the glare of bad economic news, mixed-signals about the direction of the economy and an imminent change in administrations, many business tenants are opting to stay in a holding pattern and renew... State oil and gas leases sold (Bozeman Daily Chronicle) Oil and gas tracts under and along the Yellowstone and Boulder rivers that caused concern among conservation groups this summer sold for a pretty penny this week at the state?s regular oil and gas lease sale. Carl Pope: A Very 21st-Century Scandal (HuffingtonPost) Denver -- Reporters periodically ask me for good story leads. For five years I've been urging them to dig into the oil and gas leasing... Sex, drugs and . . . offshore oil drilling (Louisville Courier-Journal) An Interior Department investigation found a "culture of substance abuse and promiscuity" by workers at the federal agency that issues offshore drilling leases and collects royalties. Site: leases leasing - Google News National parks marginally escape Bush?s last-minute leasing program - Examiner.com
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