Equipment Leasing and Finance Association - Equiping Business for Success

Historical Documents

Bankruptcy Reform

In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (P.L. 109-8). The Act contained two provisions specifically beneficial to the equipment leasing & finance industry: defaults based on non-monetary obligations and changes to the "ordinary course of business" rule.

In the defaults based provision, the Act clarified the debtor-lessee is obligated to perform all non-monetary and monetary obligations 60 days after the order for relief of all monetary/non-monetary obligations pending assumption or rejection of the lease. This is to help ensure constancy in interpretation of bankruptcy courts of section 365(b)(2)(D).

The second beneficial change makes it easier for equipment lessors to satisfy the "ordinary course of business" rule and keep rents paid within 90 days of the debtor-lessee's bankruptcy. Under this Act, if irregular rental payments from the lessee are viewed as coming within the 'ordinary course of business' in the industry then the lessor will be able to keep these payments.


The financing of renewable energy equipment and projects is emerging as an important component of the equipment leasing and finance industry. Rising energy costs coupled with energy security and climate concerns have increased national interest in renewable electricity generation. Continued growth in this sector is dependent not only on technological advances but also upon the continuation of governmental support for renewable energy technologies. Renewable energy production tax credits (PTCs) and renewable energy investment tax credits (ITCs) are prime examples of this support.

Following the passage of the Emergency Economic Stabilization Act of 2008 (P.L. 110-385) and the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), the federal 30% investment tax credit (ITC) for solar property is available for projects placed in service by the end of 2016 and can be taken entirely in the year of placement in service. Additionally, the solar ITC is allowed to offset alternative minimum tax (AMT) and regulated public utilities are allowed to claim solar ITC and the previous prohibition on combining the credits with other subsidized energy financing has been repealed. Solar equipment has attributes that are particularly suitable for leasing. Solar assets are long lived assets and require high up front financing. Solar projects provide a predictable source of supply, a proven technology and low maintenance costs.

The production tax credit (PTC) for wind has been extended through 2012 and the PTC for biomass, geothermal and other non-solar renewables is extended through 2013. The ARRA allows eligible taxpayers to elect a 30% ITC in lieu of ten years of production credits and notably temporarily allows an elective conversion of a PTC or ITC into federal cash grants in amount of 30% of asset cost or the ITC amount. Thus parties have the option to forego tax credits and receive a check from the Treasury Department for 30% of the cost of the project.

ELFA in Action:

Guidance Materials:


A bipartisan consensus is emerging that comprehensive tax reform is necessary and imperative to further economic growth in the United States. There is growing pressure for Congress and the President to address comprehensive reform to corporate and individual income taxes. The forces driving this need are rising deficits, expiring tax provisions, and concern of an unfair tax code.

ELFA Supports Broad Tax Reform That:

  • Promotes investment in productive assets
  • Ensures maximum flexibility in financing options for businesses
  • Provides neutrality and equality in application to owner-lessors and owner users
  • Avoids changes to reduce or eliminate interest deductions that increase costs of capital
  • Incentivizes investments to create economic and job growth
  • Promotes the global competitiveness of U.S. companies

Other Tax Provisions ELFA Monitors:


IRS Guidance:


Other Issues: