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What is a master equipment lease agreement?

Many equipment lease transactions use a master lease to cover terms and conditions of all of the individual lease transactions to be entered into between the parties.  A master lea…


What is a loan sale?

A loan sale is the transfer of the ownership and control rights of a loan from the seller to the buyer without recourse, guarantee, insurance or other credit enhancement, with the…


What is a loan participation?

A participation is a funding arrangement whereby a participant (buyer) provides to the loan originator and grantor (lender of record, existing lender) funding (a deposit) for the l…


What is a loan modification?

Loan modification involves an amendment to the terms of an outstanding loan, typically involving a change in the interest, principal and/or term of the loan.  One or more of the fo…


What is a liquidation? What is a dissolution?

Liquidation is the bankruptcy process in which a liquidator assembles and sells a debtor’s assets and distributes the sale proceeds to creditors in accordance with the priority rul…


What is a leveraged lease?

A leveraged lease is a noncancellable long-term big-ticket finance lease that relies on long-term debt provided to the lessor for the leased asset’s refinancing, it involving the l…


What is a lessor’s investment in a lease?

The sum of the undiscounted minimum lease payments (MLPs) to be made on a finance lease plus any unguaranteed residual value (URV) accruing to the lessor is the gross investment in…


What is a leasing company?

A financial institution predominantly engaged in the business of originating and underwriting lease transactions is a leasing company.  Leasing companies come in the form of bank l…


What is a lease underwriter?

A lease underwriter is a lessor, typically the lease originator, that assumes the risk of a lease and assures and arranges the transaction.  Lease underwriters commonly originate l…


What is a lease proposal?

Instead of a lease application, a request for proposal (RFP) outlining the need of prospective lessees for the financing of mid- and big-ticket assets is prepared and sent to prosp…


What is a lease master trust?

A master trust is an investment structure that allows for the holding and management of a portfolio of assets and a dynamic collateral profile allowing for the addition of new coll…


What is a lease funder?

A lease funder is any party other than the lessor that provides funding to the lease originator either as a lease purchaser purchasing legal title and the risks, rewards and contro…


What is a lease commitment letter?

A document prepared by a prospective lessor and presented to a prospective lessee that sets forth the lessor’s commitment to provide the proposed lease is a commitment letter.  A c…


What is a lease broker? What is a packager?

A lease broker is an individual or firm that arranges lease transactions, commonly involving commercial and industrial equipment, as agent between lessees and lessors – without par…


What is a lease assignment agreement?

An assignment is the transfer of some or all of the rights in a contractual arrangement and/or an asset to another party, where the obligors under the arrangement are bound to perf…


What is a lease application?

The form provided by a prospective lessor that, often combined with a credit application, is filled out and returned by the prospective lessee to provide the lessor with basic info…


What is a guarantee?

A guarantee is personal security in the form of an agreement provided by a third party, typically a parent company, to a creditor to assume a debtor’s obligation in the event the d…


What is a grace period? What is a debt waiver?

A given period of time during which a lender does not require payment on a loan and principal and interest does not come due for payment is a grace period.  Grace periods are commo…


What is a functional currency?

For the consolidation of the financial statements of a multinational corporation with one or more subsidiaries operating in a currency different to that of the parent company, a pr…


What is a debt-equity swap (DES)?

A debt-equity swap (DES) is a debt restructuring in which a creditor provides new equity capital in the debtor in exchange for cancellation of outstanding debt it is owed, thus imp…


What is a debt-debt swap (DDS)?

A debt-debt swap (DDS) is a debt restructuring by which: Old debt is novated between the same debtor and creditor, with amended terms and conditions and/or a new principal amount;…


What is a debt-asset swap (DAS)?

A debt-asset swap (DAS) is a debtor’s transfer to a creditor of third-party receivables, real estate, or other assets to satisfy a debt.  Debt-asset swaps frequently occur as debto…


What is a debt participant?

A third-party institutional investor (insurance company, pension fund) unaffiliated with the lessor or lessee that lends the long-term debt funding in a leveraged lease on a nonrec…


What is a credit rating agency?

Where a credit bureau focus on consumer credit, a credit rating agency (CRA) is an independent company that evaluates and quantifies the credit risk of banks, nonbank corporations…


What is a credit model?

A credit model is an analytical method that models the credit default process based on available information used to determine the probability of default on a credit arrangement (l…


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