Amicus Curiae Brief — Pan Am Corp. v. Section 1110 Parties

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No. 90-1530

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1990

PAN AM CORPORATION, et al.,

Petitioners,

v.

SECTION 1110 PARTIES, et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the

Second Circuit

MOTION FOR LEAVE TO FILE

AND

BRIEF AMICUS CURIAE OF AMERICAN ASSOCIATION

OF EQUIPMENT LESSORS SUPPORTING

RESPONDENTS IN OPPOSITION TO PETITION FOR

CERTIORARI

BENNETT BOSKEY

(Counsel of Record) -

ELLIS LYONS

EDWARD A. GROOBERT

Morris KLEIN

VOLPE, BOSKEY AND LYONS

918 16th Street, N.W., Suite #602

Washington, D.C. 20006

(202) 737-6580

Attorneys for American Association

of Equipment Lessors

April 29, 1991

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE

OF AMERICAN ASSOCIATION OF EQUIPMENT

LESSORS SUPPORTING RESPONDENTS IN

OPPOSITION TO PETITION FOR CERTIORARI

The American Association of Equipment Lessors

(‘‘AAEL’’) hereby moves for leave to file the annexed

Brief Amicus Curiae Of American Association Of

Equipment Lessors Supporting Respondents In Op-

position To Petition For Certiorari. AAEL’s interest

is set forth in the annexed Brief Amicus Curiae. Writ-

ten consent has been obtained from the petitioners

and is being lodged with the Clerk. Written consents

have been obtained from counsel for a substantial

number of the respondents and are being lodged with

the Clerk. However, in view of the large number of

respondents, consents have not been received on be-

half of all of them (though none has been refused) as

of the time this motion and annexed brief are being

prepared for filing, and, hence, as a precaution, this

motion is accompanying the brief.

Respectfully submitted,

BENNETT BOSKEY

(Counsel of Record)

ELLIS LYONS

EDWARD A. GROOBERT

Morris KLEIN

VOLPE, BOSKEY AND LYONS

918 16th Street, N.W., Suite #602

Washington, D.C. 20006

(202) 737-6580

Attorneys for American Association

of Equipment Lessors

April 29, 1991

No. 90-1530

IN THE

Supreme Court of the GAnited States

OCTOBER TERM, 1990

PAN AM CORPORATION, et al.,

Petitioners,

v.

SECTION 1110 PARTIES, et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the

Second Circuit

BRIEF AMICUS CURIAE OF AMERICAN ASSOCIATION

OF EQUIPMENT LESSORS SUPPORTING

RESPONDENTS IN OPPOSITION TO PETITION FOR

CERTIORARI

BENNETT BOSKEY

(Counsel of Record)

ELLIS LYONS

EDWARD A. GROOBERT

Morris KLEIN

VOLPE, BOSKEY AND LYONS

918 16th Street, N.W., Suite #602

Washington, D.C. 20006

(202) 737-6580

Attorneys for American Association

of Equipment Lessors

April 29, 1991

TABLE OF CONTENTS

Page

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REASONS FOR NOT GRANTING CERTIORARI ..............

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TABLE OF AUTHORITIES

Page

Cases:

In re Braniff, Inc., 110 B.R. 980 (Bank. M.D. Fla.

SISTITEET wicnihaiessnninassebiblcaneliainsieamen tian ee 4

In re Continental Airlines, Inc., et al., Debtors,

(U.S.D.C. District of Delaware, No. 91-58, de-

cided March 26, 1991), on cg to United

States Court of Appeals for the Third Circuit,

BREESE AOE 4

Statute:

Section 1110 of the Bankruptcy Code, 11 U.S.C.

UT | cocevsacuninsaptnnuendestiiobiannseneeeaiadiantlamiiatabase passim

Other:

U.S. Department of Commerce, ‘1991 U.S. Indus-

trial Outlook” (January 1991) ......... ee. 2

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1990

No. 90-1530

PAN AM CORPORATION, et al.,

Petitioners,

Vv.

SECTION 1110 ParTIgs, et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the

Second Circuit

BRIEF AMICUS CURIAE OF AMERICAN ASSOCIATION

OF EQUIPMENT LESSORS SUPPORTING

RESPONDENTS IN OPPOSITION TO PETITION FOR

CERTIORARI

The American Association of Equipment Lessors

(AAEL), as amicus curiae, does not doubt that the

question of law under Section 1110 of the Bankruptcy

Code presented by the petition for certiorari is a ques-

tion having importance. But in AAEL’s view, it is

not important that this question, which has been cor-

rectly disposed of by the three courts below, be given

still further appellate review—at least in the absence

of a conflict of Circuits, which has not occurred and

which there is no reason to think is likely to occur.

Accordingly, AAEL strongly urges that Pan Am’s

petition for certiorari be denied.

INTEREST OF AAEL

AAEL is the major national trade association in

the multi-billion dollar equipment leasing industry,

with about 900 member companies, located through-

out the United States and in foreign countries, en-

gaged in every aspect of leasing equipment to

business, commercial, governmental and agricultural

organizations.

According to the Department of Commerce, the vol-

ume of equipment leasing in this country, as measured

by original cost of the equipment, was $132.0 billion

in 1990, and is projected to be $143.7 billion in 1991.'

AAEL estimates that AAEL’s members account for

over two-thirds of this volume.

Equipment leasing represents well over 30 percent

of all capital investment in the United States each

year. Second only to the commercial paper/bond mar-

ket, leasing is the next largest source of investment

capital for business, industry and agriculture in our

economy. Equipment is also leased to federal, state

and local governmental agencies for a variety of im-

- portant public uses.”

‘U.S. Department of Commerce, ‘1991 U.S. Industria] Out-

look” (January 1991) at 51-1.

2 Equipment leasing is utilized by, and helps to fuel the eco-

nomic growth and productivity of, virtually every segment of

our economy. The types of equipment leased for business pur-

poses include agricultural; aircraft; automobiles; computers; con-

struction; container and intermodal equipment; electrical power

AAEL estimates that approximately 130 of its

members engage in the leasing of aircraft to certif-

icated carriers and others. A very substantial portion

of these leases are sale-leaseback arrangements which

would be adversely affected in major ways if Pan

Am’s position were to prevail. This led AAEL to

make submissions as amicus curiae in the courts be-

low opposing Pan Am on the merits. It is AAEL’s

understanding that the sale-leaseback is the dominant

form of aircraft leasing transaction employed in the

United States airline industry—with respect to both

newly-acquired aircraft and previously-acquired air-

craft

As the national trade association for equipment

leasing companies, AAEL is vitally interested in mat-

ters which affect the industry. The applicability of

Section 1110 of the Bankruptcy Code to sale-lease-

back transactions—and particularly to ‘“‘non-acquisi-

tion’”’ sale-leaseback transactions—is an issue which

has profound effects not only on AAEL’s members

but also on the ability of airlines to obtain needed

aircraft and financing and hence, in a much larger

sense, on the public interest. From its national per-

spective, AAEL is in a position to help the Court

assess the strong reasons why further appellate re-

view of this issue through a grant of certiorari is not

called for.

generation; furniture and fixtures; industrial; manufacturing; ma-

terials handling; medical; office machines; pollution control and

environmental; railroad rolling stock; telecommunications; trucks

and trailers; and vessels. Equipment leasing is one of the major

methods by which American businesses acquire the capital equip-

ment and financing needed to succeed in today’s highly com-

petitive domestic and international markets.

REASONS FOR NOT GRANTING CERTIORARI

In summary form, in addition to the points being

made by others, the points to which AAEL especially

invites attention, in opposition to Pan Am’s petition

for certiorari, are these:

1. No conflict of decisions exists. This case has been

decided unanimously against Pan Am by the Bank-

ruptcy Judge, by the District Court, and by a unan-

imous Court of Appeals. Moreover, in the Continental

Airlines bankruptcy originating in the District of Del-

aware, a contrary decision by a Bankruptcy Judge in

the District of Delaware was promptly reversed by

the District Court there in a well-reasoned opinion

which fully accords with the decisions here. In re

Continental Airlines, Inc. et al., Debtors, Cases Nos.

90-932 through 90-984, Civil Action No. 91-58, de-

cided March 26, 1991. Continental has taken the de-

cision on appeal to the Third Circuit (No. 91-3204).

The appeal is scheduled to be argued in the Third

Circuit on May 1, 1991, but there is no reason to

suppose the District Court will be reversed. The only

other decision directly in point, by the Bankruptcy

Court in the Middle District of Florida, is likewise in

accord. In re Brantff, Inc., 110 B.R. 980 (Bankr.

M.D.Fla. 1990). Thus, the law has been firming up

on a uniform basis and can be expected to become

correctly settled without any need—or indeed any oc-

casion—for intervention by this Court. In this con-

nection, it should be noted that Pan Am’s petition

for certiorari (p. 12) acknowledges that:

“The Court is unlikely to benefit from fur-

ther review of this issue by the lower courts.

A consensus has clearly developed contrary

to the position we advocate on this appeal,

including comprehensive opinions by district

courts acting as appellate courts in the Sec-

ond and Third Circuits. The Court of Appeals

below obviously thought the issue was suf-

ficiently settled that it did not even choose

to write an opinion.”

2. The opinions which have been rendered are care-

ful and convincing as well as correct. Not only are

the opinions “comprehensive” as Pan Am has ac-

knowledged; they also deal with the issues meticu-

lously and definitively. Every argument by which Pan

Am has made a futile effort to distill something out

of the legislative history and the structure of the

statute has been presented by Pan Am below and has

been found, with total justification, to be without legal

merit. Further appellate review is not called for.

3. The granting of certiorari would deprive the les-

sors, in substantial measure, of the speedy and ef-

fective remedy which Section 1110 of the Bankruptcy

Code by its plain language provides to them. Pan

Am’s efforts to postpone the inevitable would, if suc-

cessful, defeat the central purpose of Section 1110.

The delay arising out of carrying this case over the

Court’s summer recess would inflict irreparable injury

on lessors and would impose an ill-advised period of

new uncertainties on airline financing generally.

4. Thus the granting of certiorari—unless accom-

panied by a summary affirmance—would adversely af-

fect the public interest by injecting needless

substantial uncertainty with respect to both the avail-

ability and the cost of airline financing. It must be

expected that this would (i) increase the difficulties

of the already severely-troubled airline industry; (ii)

raise the costs of airline operation in ways that would

threaten to increase air fares substantially, and (iii)

increase the risks to the public safety by jeopardizing

airline stability even further.

CONCLUSION

For the foregoing reasons, as well as those being

specified by others opposing Pan Am’s petition for

certiorari, certiorari should be denied.

April 29, 1991

Respectfully submitted,

BENNETT BOSKEY

(Counsel of Record)

ELLIS LYONS

EDWARD A. GROOBERT

Morris KLEIN

VOLPE, BOSKEY AND LYONS

918 16th Street, N.W., Suite #602

Washington, D.C. 20006

(202) 737-6580

Attorneys for American Association

of Equipment Lessors