Vedder Price Shareholders Arlene Gelman and Eddie Gross published “A Valentine’s Day Massacre of Liquidated Damages: In re Republic Airways Holdings Inc.” in the current issue the Equipment Leasing & Finance Foundation’s Journal of Equipment Lease Financing (vol 37, no. 2, Spring 2019).

In the article, Ms. Gelman and Mr. Gross address a bankruptcy court ruling on Valentine’s Day 2019 in Southern District of New York that could be problematic for lessors when enforcing certain typical acceleration and collection remedies against defaulting customers. Specifically, In re Republic Airways Holdings Inc., 598 B.R. 118 (Bankr. S.D.N.Y. 2019), could encourage lessees and guarantors to argue that they should not be held accountable to pay stipulated value-based liquidated damages provisions in hell-or-high-water leases and guaranties of those obligations under unconditional and absolute guaranties, even though these and other economic terms were negotiated and agreed-to by sophisticated parties represented by counsel. Ms. Gelman and Mr. Gross discuss statutory and case law applicable to UCC Article 2A liquidated damages and unconditional guaranties, why they believe the Republic court erred, and enforcement and transactional implications to lessors.

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