Nor did Synergy dispute the amounts of future payments, end of lease payments, repair and maintenance costs or repossession costs claimed by Wells Fargo. As noted above, Synergy was not disputing that its guaranties were absolute and unconditional, that the claimed amounts were outstanding nor that it had failed to pay the guaranteed amounts. ![]() Wells Fargo also demanded payment, pursuant to the guaranties, of attorneys' fees and expenses Wells Fargo incurred in enforcement, as well as prejudgment interest accruing on the unpaid lease damages amounts. 3 These damage amounts correlated with the damages remedies in the leases, which also included a mitigation credit to be applied to any such damages claim in the amount of any proceeds of a sale or lease by Wells Fargo of the engines if returned. The lease damage provisions included: (1) past due rent and use fees (2) the present value of future rent for the remaining terms of the leases (“ future rents”) (3) compensation for failure to return the engines in accordance with the lease requirements (“ end of lease payments”) (4) costs to repair any defects in the condition of the engines (“ repair and maintenance costs”) and (5) costs for repossessing the engines. The damages claimed by Wells Fargo were based on the default remedy provisions in the leases and guaranties. Because, as the parties stipulated, the guaranties were absolute and unconditional, the lease/guaranty obligations were outstanding and Synergy had breached its guaranties, the court only needed to decide whether the damages provisions under the leases and guaranties were valid, and if so, the amount of damages to be awarded to Wells Fargo. The court was asked to decide motions for summary judgment by Wells Fargo, who was seeking to recover lease damages from Synergy, and by Synergy, seeking a judgment of no liability and arguing that the damages claims under the guaranties are unenforceable. After Avianca defaulted under the leases, Wells Fargo brought an enforcement action against Synergy pursuant to the guaranties. (" Synergy") guaranteed Avianca’s obligations under the two leases. d/b/a Avianca Brazil (" Avianca"), pursuant to which Wells Fargo leased aircraft engines to Avianca, and Synergy Group Corp. The case related to two leases between Wells Fargo Trust Company, N.A., as owner trustee (" Wells Fargo") and Oceanair Linhas Aereas S.A. Synergy case decided in June 2 should be useful to lessors and financing providers both as precedent supporting similar actions and as guidance when documenting these remedies. Despite some anxiety raised by a 2019 aircraft lease liquidated damages case, 1 the Wells Fargo v. Further, lessors and other financiers of leased aircraft and other equipment often rely on guaranties by an affiliate of the lessee or an interested 3rd party as essential credit support for the lessee’s damages and other payment obligations. Whenever such downturns occur, the soundness of the documentation and other practices by a lessor or other financing provider to this industry is often tested, and especially when a lessor or other financier undertakes to enforce its lease remedies set out in the related transaction documents.Īmong the most critical remedies for a lessor, whether involving a commercial aircraft, a forklift, high tech assets or manufacturing equipment, is the right to demand and collect liquidated damages from the lessee upon a default under the lease. These are turbulent times for aircraft lessors and lenders, especially those involved in large lease and financing transactions involving airline lessees. Public Services, Infrastructure, Transportation.
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