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June 29, 2001 United
Capital-Today special
report from July's "Day in History" chronicles the four day battle at Gettysburg Textron---Closes Vendor Finance Group????? Leasing News is seeking confirmation or denial of this information sent to us: "Textron Financial is closing their Vendor Finance Group that is based in Providence, RI and Portland, OR. " Any information would be appreciated. editor United Capital, Austin, Texas---Today Steve Dallas and his brother started out in Santa Clara, California, the city where Leasing News is located. When I was president of the Santa Clara Chamber of Commerce, I called on this company to get them to join. They did not as they stated their business was all over the United States, and would be moving "soon." His brother still operates in the neighboring City of San Jose. Steve Dallas appears to be operating Spectrum Leasing, in the same shopping center as what today is a "shell". Spectrum Leasing representatives are getting bold, as several readers have informed us that their telemarketers are telling lessees, vendors, and brokers they were "formerly United Capital." . The first signs of trouble occurred when they did not show up for the National Association of Equipment Leasing Brokers Conference in Nashville, Tennessee in April, 2000. They had a booth, rooms, and even airline tickets, but their bank was balking, and their main Wall Street source of money, Lehman Brothers did not know what was going on, we are told, but the bank did. Funding of deals, collections were becoming a problem, and the economy at this time was still going "hell bent for leather." In December, 2000, Dallas told Leasing News,'"... "We will survive!" "We are only taking 'cream puff" deals now," Steve Dallas, President of United Capital says. " We are not downsizing. We are trying to take care of the 15 select advisors, our customers, who have been good to us and to lobby for their deals." The main funding "partner" changed their leasing credit guidelines with less than a one day notice, throwing the operating into a turmoil "...with no time to plan or adapt to the rules that changed. " In an effort to raise capital, management was trying to sell off its stream of payments from the leases they were servicing Many companies looked at buying the United Capital portfolio. Several sources, booth funders and portfolio negotiants told us, it was it suitable. The portfolio was described as poor quality. "Superbroker paper" was a term most used. And there appeared to be no more " reps and warrants" since United Capita was "dead." In desperation, Lehman Brothers took over, looking for a "servicer" again, actually seeking several bids. Winner, and now currently being servicing under private label lock box by Information Leasing Corp ( 888-452-7845 ) As far as the Lessees know United Capital is still alive. Leasing News is told that Steve Dallas and senior management knew what was going to happen before Lehman Brothers basically pulled the plug. The writing was on the wall, so to speak. A solution was being negotiated that would have solved the problem. There allegedly would not by any layoffs. More importantly, the situation would not have deteriorated to the point that now exists. It is reported by several individuals who were alleged witnesses, there was a presentation made and the company wouldn't have traveled the road that was chosen. Steve Dallas did not like the offer and overrode everyone objections. Lehman Brothers reaction was quick and decisive, basically saying, "If you don't care about what happens to your company, why should we?" "I felt that there was a real possibility that our stakeholders (Lehman, employees, customers/brokers, etc.) were going to be harmed, " Leasing News was told. " If the standstill agreement was executed as I assumed it would, UC would have had ample time to cure their current problems. Instead, the standstill agreement wasn't executed and I left, consequently, Lehman lost confidence and decided to stop funding (as I would have done in their situation). They were pretty reasonable to work with considering the situation. "I understand your concern regarding disgruntled UC employees, I am not one of them. I have remained in contact with Steve Dallas and have a great deal of sympathy for his situation. Off the record, I am actually an unsecured creditor of UC as it relates to past due compensation from the fiscal year 2000. I have no hard feelings for UC or Steve Dallas, although to be honest I wasn't a huge fan of Peter, my counterpart who was the VP of Business Development. Regarding rumors related to future Lender Liability claims, a highly reliable informed source tells Leasing News they would be extremely surprised if any lender liability claims were successful. Another insider reports, "As it specifically relates to Lehman, for the most part Lehman was extremely reasonable to work through existing issues. Lehman mistakes did not occur during the workout phase, but the initial underwriting and monitoring of their commitments. They got into a business that they didn't understand. This is obvious based on a quick look of their recent leasing portfolio customers: United Capital, T&W Financial, Terminal Marketing and Unicapital." "The resulted liability is not a successful lender liability claim, but losses as it relates to the specific deals, " the insider explained. " Their current leasing portfolio commitments as it relates to the above relationships greatly exceeds the collateral value of the underlying leases. In any case, it is also assumed, they will become an unsecured creditor as it relates to the deficiency amount and will probably not be able to collect, resulting in major write-downs in their portfolio." This was caused by a combination of the following, Leasing News is told: "Lack of collateral management (i.e. mark to market and monitoring collateral performance), understanding the small ticket leasing business, high advance rates, and making large commitments to undercapitalized firms. Most of these commitments were made during the high flying times in the leasing business, late 1997 and pre-October 1998 -- prior to the Russia defaulting on their bonds. "After the default, there were allegedly major liquidity issues with hedge funds, prior to that point hedge funds were purchasing the B strips on securitizations, historically these strips were the equity piece held by the issuer. With hedge funds purchasing these notes, it allowed smaller first time undercapitalized leasing companies access to the securitization market." It is assumed Wall Street saw huge underwriting fees in these ABS. Therefore they provided warehouse facilities to undercapitalized firms thinking that they could push the paper out on the public market. Our informed source: " Guess what, that wasn't t the case." CMA LAUNCHES ENCYCLOPEDIA OF CREDIT AND CREDIT COMMUNITY ON NEW WEB SITE ANSCERS.COM CMA has completed the Encyclopedia of Credit, the first phase of a major technology initiative to bring all of CMA's products and services to the Internet. The Encyclopedia of Credit is a comprehensive, Internet-based information and resource guide for the business credit community. Topics include financial and risk analysis, banking, credit and collections, international sales, and legal issues related to business credit. CMA debuted a beta version of the Encyclopedia at NACM's 2001 Credit Congress where conference visitors discovered the quick reference and training applications of the system's easy to use "Ask Jeeves" style functionality. Accompanying the Encyclopedia of Credit is a Credit Community Bulletin Board that will provide additional information and resources by drawing upon the knowledge and experiences of other business credit professionals. Both of these services are FREE and can be found at CMA's new interactive e-commerce web site www.anscers.com. Alfredo R. Vionnet Firewall Report Response: We use Capital Streams, Inc.'s CenterPoint software, that used by Mellon, Bank of the West, BancAmerica, Unicapital, Dumac, etc. Originally, we had written our application in the DOS environment and were forced to start conversions with the advent of the new versions of Windows, back in 1994 and later. This became a heavy task for me to do, since I had written the original one myself and then, what was called Vertical Connections (then System 1 and now Capital Stream) had commenced to develop their original software pieces, which we chose to take to save time and effort. So, we started using their wonderful applications since the time they first started with their with their Version 1.0 of System 1 and became their first paid customer, when we chose not to re-write our own application for the Windows environment. We always build our own servers and workstations and have, after trying many different combinations of components, including different types of motherboards, processors, memory configurations, etc. and found that, though the AMD brand has always been a really good products, it presented limitations in some cases where the applications were not written with some of the required provisions to use processors, other than the common Intel ones. As a result, we tried some machines with AMD and some with Intel. Some with Intel motherboards and some with other brands ad found that the most reliable motherboards and those offering the best update capabilities for future needs, thus allowing us to use them for a longer period before having to change them were the ones from Asus Tech. Conversely, the ones from Intel had to be returned several times for warranty exchanges. Go figure! Here's their site address: http://www.asus.com/ Their reliability has been the best we have been able to ascertain and their pricing is of the best kind. Also, we cabled our own networks, installed our own backup and firewall systems and found that the Sysco firewalls are "bar none" and priced reasonably. I just thought to contribute to your note, given that we all should know what's available around us for equipment choices and component origins and be prepared when sales people want to sell equipment to us, not only for our own protection but to also know what they are selling to our customers, the ones we finance, who later become disenchanted when they discover they're using substandard equipment. Best regards, Alfredo
R. Vionnet, Pres. Paragon Capital Acquires assets of elease.com Paragon Capital, an independent equipment leasing company specializing in high tech equipment, announced today that it has successfully entered into an agreement to purchase certain eLease assets from Elease, an Idealabs! Company for an undisclosed amount. The purchase includes all intellectual property rights associated therewith, including trademark and trade-name rights and associated goodwill ("Domain Names") of eLease. Paragon
Capital States Modify Lease Definition and Define Software ( special report from Equipment Leasing Association VP Governmental Relations Dennis Brown ) There is a new sales tax system under development by a multi-state organization of state revenue officials known as the streamlined Sales Tax Project (SSTP). It will ultimately be applied to all types of transactions within consumer and commercial markets, including equipment leasing. On Monday, June 25, the Equipment Leasing Association (ELA) met with the SSTP subcommittee assigned lease/rental in Raleigh, North Carolina to review public comment before the subcommittee makes recommendations to the SSTP Executive Committee on a final definition. Concurrently, definitions of software and digitized products emerged from another subcommittee. Following Executive Committee review/revision the leasing and software definitions will join other definitions such as tangible personal property scheduled for public hearing at the Minneapolis Airport Hilton, Thursday, August 23 and Friday, August 24. After the hearing, definitions proceed to the new organization of governing states expected to form in September or October. The new governing body of states will be the last chance for industry groups dissatisfied with definitions to win a reprieve. Each state enacting the model Act will have one vote in a final determination of what is included in the Streamlined Sales and Use Tax Agreement sent to states as model legislation. To receive periodic email updates on developments send a request to dbrown@elamail.com with your name and company. The final lease definition text will only be known after Executive Committee members of the Streamlined Sales Tax Project review and possibly revise the following recommendations forwarded by a subcommittee of state revenue officials . --Some state officials have challenged inclusion of the nominal purchase option, some doubt the $100 threshold while others question use of California as a model for the section. ELA must defend it at the Minneapolis hearing. --The Executive Committee may decide not to deal with motor vehicles during this phase of the process and omit vehicles from the definition. --The Terminal Rental Adjustment Clause (TRAC) language for vehicles has been challenged and vehicle lessors must defend it at the Minneapolis hearing. Specific mention of TRAC previously contained in the definition will likely be removed from Section 2 with reference to IRS Code Section 7701 (h)(1) inserted in its place. --The sale-leaseback provision in an earlier draft was removed. --Section 3 isolating the lease definition from other areas such as property and income tax or the UCC was deemed important but will be rewritten as a positive statement. --The leasing/rental subcommittee will consider transition rules. --Treatment of lease/rental in the sale price definition has yet to be determined. Lease Definition [The following text is a recommendation of the Streamlined Sales Tax Project Subcommittee on the Lease/Rental Definition] Lease or rental means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration …which may include future options to purchase or extend [language regarding future options will be moved from Section 2 and inserted here but the specific text is not yet determined] 1) Lease
or rental does not include: 2) Lease or rental does include: Agreements covering motor vehicles and trailers where the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property. [insert reference to IRS Code Section 7701 (h)(1)] 3)Characterization of Transaction for Other Purposes: Whether
or not a transaction is characterized as a lease under generally accepted accounting
principles, the Internal Revenue Code, the [state commercial code], or other provisions
of federal, state or local law, is irrelevant to the proper classification of
a transaction as lease for purposes of this [chapter]. Software Definition The Tangible Personal Property subcommittee labored to draft an initial definition of digitized products and software at the same time the lease/rental subcommittee worked on the lease definition. Issues to be addressed by industry in this draft definition include the 10% bright line test on custom software. These definitions will undergo further revision before public comment in Minneapolis. What appears below should not be seen as final products. Digitized Product - A product that is delivered electronically and would be taxable if it were delivered on a CD, a disk, or in another tangible form. Software - A set of coded instructions designed to cause a computer, another electronic device, or automatic data processing equipment to perform a task. Custom Software - Software that is created for a specific user where the cost of any prewritten software included is no more than 10% of the sales price. Modification of prewritten software by more than 10% of the price is excluded to the extent the charges for the modification are separately stated on the invoice, billing, or similar document given to the purchaser. CONTACT:
######## ############## ###################### ############### FurnitureFind.com Adds Leasing Option for Business Customers Large and Small BUCHANAN, Mich., -- Executives at FurnitureFind today announced a new Business Leasing program in cooperation with Direct Capital Funding, Inc. The program will allow FurnitureFind's business customers to take advantage of multiple leasing programs directly from the www.FurnitureFind.com web site. "We're very pleased to be working with Direct Capital Funding, Inc.," says Steve Antisdel, CEO of FurnitureFind. "They offer a great deal of flexibility with lease programs that require no large down payment, deferred payments and seasonal payment plans. We've worked together to create an online application that's quick and painless. It's just one page long. In 24 hours or less the paperwork is processed and our customer is advised on the lease terms available." "This is something our business customers have been asking about for a long time," added Pam Durkin, FurnitureFind's Director of Sales and Merchandising. "We serve a national market that includes many kinds of businesses, from B & B's to big hotels; from small or home offices to Fortune 500 companies as well. Many of these customers prefer leasing for certain tax advantages and to better manage their cash flows ... They're going to love this!" "We are excited about our new relationship with FurnitureFind.com, and we look forward to providing their clients with quality, personalized service," says Jason Ames, President of Direct Capital Funding, Inc. About Direct Capital Funding, Inc. Direct Capital Funding, Inc. is a cutting edge commercial leasing company with years of experience and expertise in the leasing industry, offering some of the most flexible leasing terms and programs available including: The Upgrade Lease -- Upgrade equipment or add to a lease mid-term without changing payment terms; 90 Day Deferred Payments -- Allows time to let new equipment start generating revenue; $20 Security Deposit -- No large down payment; Seasonal Payment Plans -- Allows a business to pick 3 months each year to skip lease payments, ideal for the seasonal business. With expanded programs for customers with past credit problems and for start-up businesses, Direct Capital Funding, Inc. provides quick decisions, personal service and the convenience a business needs to succeed. About FurnitureFind.com Launched in 1996, FurnitureFind.com is today a leading online retailer and information resource for over 100 furnishings brands including Simmons Upholstery, Howard-Miller, Sealy Posturepedic, Harris Scott, Schnadig, and Standard Furniture. The Company also provides online marketing and call center services for retailers of window coverings, flooring, cooking, framed art, services and financial products. ### ########### ######################## ( Getting Ready for Legal Matters: ) Comdisco Names Robert Lackey Senior Vice President and Chief Legal Officer ROSEMONT, Ill.--(BUSINESS WIRE)-- --Comdisco, Inc. (NYSE:CDO), a technology services firm, announced late yesterday that it has appointed Robert E. T. Lackey, 53, senior vice president and chief legal officer. Lackey succeeds Jeremiah Fitzgerald, 48, who recently retired. Lackey comes to Comdisco from Burns International Services Corporation, where he had been serving as vice president, secretary and general counsel since 1997. From 1991 to 1995, he was the vice president, secretary and general counsel for Transamerica Commercial Finance Corporation and, from 1985 to 1991, he worked in various legal and management positions for Heller Financial, Inc. Lackey holds a Juris Doctor degree from DePaul University, Chicago, IL, and a Masters in Business Administration from Northwestern University, Evanston, IL. He completed his undergraduate studies at DePauw University, Greencastle, IN, where he received a Bachelor of Arts in political science. Fitzgerald, who joined Comdisco in 1978, had been serving as chief legal officer since October of 1999. "Bob Lackey brings valuable experience to Comdisco and I look forward to working with him as part of our management team," said Norm Blake, Comdisco's chairman and chief executive officer. "Jerry Fitzgerald served with distinction over many years at Comdisco and we wish him all the best in his retirement." About Comdisco Comdisco (www.comdisco.com) provides technology services worldwide to help its customers maximize technology functionality, predictability and availability, while freeing them from the complexity of managing their technology. The Rosemont, (IL) company offers a complete suite of information technology services including business continuity, managed web hosting, storage and IT Control and Predictability Solutions(SM). Comdisco offers equipment solutions to key vertical industries, including semiconductor manufacturing and electronic assembly, healthcare, telecommunications, pharmaceutical, biotechnology and manufacturing. Through its Ventures division, Comdisco provides equipment leasing and other financing and services to venture capital-backed companies. The company's revenue for the twelve months ended March 31, 2001 was $3.8 billion. ##########
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