Infocast’s Projects & Money, January 14-16, brings together the project finance community to connect, share information about upcoming project opportunities, get the latest market intelligence on the trends in the markets and hear the best available perspectives on the financing and deal-making landscape.

Troutman Sanders Capital Projects & Infrastructure Section Leader, John Leonti will serve as a moderator on the panel listed below.

Panel Description

Tax Equity Perspectives

Thursday, January 16, 2020, from 9:30 am – 10:15 am

The panel will provide an update on the key trends in tax equity. The panelists will also discuss what the wind & solar industry can expect from tax equity during the rush to qualify projects for remaining tax credits. During the session, they will address issues such as:

  • How is the upcoming phase out renewable tax incentives driving current investment decisions? What is the availability of tax equity?
  • Tax equity’s view on the strategies and risks around qualification for remaining credits
  • How does tax equity get comfortable with C&I structures, hedged merchant projects and other emerging structures?
  • Tax equity’s perspectives on solar + storage, wind + storage and the emergence of wind + solar + storage

Moderator: John Leonti, Partner, Troutman Sanders


Gary Blitz: Co-Chief Executive Officer, AON M&A TRANSACTION SOLUTIONS


Gary Kerr: Vice President of Analysis & Structuring, SOUTHERN POWER COMPANY


  1. Learn the latest trends and upcoming project opportunities in the project finance space.
  2. Network with key players from the project finance community to connect and share information about upcoming projects and deal-making opportunities.

For more information or to register

For a 15% discount, please use discount code: 200114

The U.S. News – Best Lawyers® “Best Law Firms” report has named Troutman Sanders LLP as the 2020 “Law Firm of the Year” in Energy Law. Only one law firm is awarded “Law Firm of the Year” in each nationally eligible practice area. Rankings are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in the field, and review of relevant law firm data.

Troutman Sanders has counseled energy clients for nearly a century. Of the firm’s 650 attorneys nationwide, more than 100 practice in the energy sector, serving clients day-in and day-out across all facets of the regulatory, project finance, corporate, tax, environmental, and real estate needs of its clients, offering strategic business and legal counselling to guide clients through the unique and complex challenges that face the energy industry. 

“We are very proud to be recognized by U.S. News & World Report – Best Lawyers® as the top national firm for energy law,” said Amie Colby, a partner in the firm’s Energy practice and chair of its Regulatory and Finance Department. “The recognition highlights Troutman Sanders’ unrelenting commitment to provide the best client service to our energy clients and beyond.”

To read more, click here.


Infocast’s Mid-Atlantic Renewable Energy Summit, July 17-19, 2019, will bring policy-makers & regulators together with utilities, IPPs, developers of wind, solar & storage projects, investors, financiers and other industry stakeholders to examine the biggest PJM market challenges, navigate the complicated landscape, and take advantage of the vast opportunities for renewable energy in the market.

Troutman Sanders Capital Projects & Infrastructure Partner, Stuart Caplan, will serve as Summit Chair on July 18-19.

Troutman Sanders Capital Projects & Infrastructure Partners, Hayden Baker, Stuart Caplan and Andrew Schifrin will serve as moderators on the panels listed below.

Panel Description

The Capacity Market Changes & Their Impact on Renewable Energy Project Developments

Thursday, July 18, 2019, from 10:30 am – 11:30 am

The entire renewable energy development community in the Mid-Atlantic market is closely monitoring the continuing changes to market rules and how the capacity market reform is working itself out in 2019 and beyond. This session will analyze:

  • What changes might mean for new renewable projects
  • Wholesale level activity- rules on new projects from wholesale perspectives
  • How the continued development of renewables and RPS’ affect the wholesale market
  • How does the MOPR impact new projects?
  • Potential impacts of nuclear and coal subsidies on markets
  • Carbon pricing – zero emission credits

Moderator: Stuart Caplan, Partner, Troutman Sanders


Agustin Abalo, Director, M&A Origination, CYPRESS CREEK RENEWABLES

Jason Barker, Director, Wholesale Market Development, EXELON


Charles Koontz, Director, Transmission Strategy, CORONAL ENERGY LLC

Panel Description

The Rise of Corporate Renewable Energy – Opportunities & Challenges in the Mid-Atlantic Region

Thursday, July 18, 2019, from 3:50 pm – 4:35 pm

Corporations are exponentially procuring renewable energy all over the country. In the Mid-Atlantic region, there are a number of projects being planned. This session will discuss:

  • What and where the opportunities for C&I projects are within the region
  • Corporate renewable economics- do they make sense for this market?
  • How will PJM reconcile corporate demand for renewables with transmission issues?
  • Challenges- how to account for a supply/demand mismatch as it relates to the grid, land use, and regulations
  • Financing options & structures for C&I projects

Moderator: Andrew Schifrin, Partner, Troutman Sanders



Andrew Levitt, Senior Business Solution Architect, Applied Innovation, PJM INTERCONNECTION

Harry Singh, Vice President, GOLDMAN, SACHS & CO.

Kelly Snyder, Senior Origination Manager, East Region, EDP RENEWABLES NORTH AMERICA LLC

Panel Description

Offshore Wind- Opportunities & Challenges for the Region as Offshore Gains Traction

Thursday, July 19, 2019, from 11:45 am – 12:30 pm

The offshore wind sector continues to gain attention, especially on the east coast. PJM, with its prime location in the area generating most interest, is in a prime position to take a piece of the $300 billion estimated in potential investment to the national wind energy capacity.

  • Where are the biggest opportunities in Offshore Wind for the region?
  • How much potential capacity does offshore add to the mix and what will be its impact on the Mid-Atlantic market?
  • What approaches are being considered for integrating OSW and how do they consider project costs and schedules?
  • What are the challenges of coordinating OSW procurement within and between states?
  • How will the market wrestle with the economics of OSW?

Moderator: Hayden Baker, Partner, Troutman Sanders


James F. Bennett, Chief, Office of Renewable Energy Programs, BUREAU OF OCEAN ENERGY MANAGEMENT (BOEM)

Kris Ohleth, Senior Manager – Stakeholder Engagement – ØRSTED

Nancy Sopko, Co-Director, UNIVERSITY OF DELAWARE


  1. Get the latest information about the business development outlook and what financial alternatives you can turn to in the market.
  2. Network with key players from the renewable energy community to connect and share information about upcoming projects and deal-making opportunities.

For more information or to register

For a 15% discount, please use discount code: 192335

Last week, New York legislators endorsed Governor Andrew Cuomo’s ambitious clean energy goals, adopting the Climate Leadership Community Protection Act that targets an aggressive expansion of on- and offshore wind development and the integration of solar and battery storage resources onto the electric grid.  When implemented, the new legislation will require the complete decarbonization of the State’s electric system by 2040, net-zero emissions by 2050 with the use of carbon offsets and includes nearer-term targets for solar, batteries and offshore wind.  Governor Cuomo is expected to sign the bill into law soon.

Expanding on Governor Cuomo’s previous clean energy goals, the new legislation sets targets of: 6 gigawatts of solar capacity by 2025, 3 gigawatts of energy storage by 2030 and 9 gigawatts of offshore wind by 2035.  The latter is by far the most ambitious target of any state in the country.

As interim steps, the law requires:

  • 2030: at least 70 percent of the State’s electricity be generated by renewables (defined broadly as hydroelectric, wind, solar and certain bio-mass resources), an increase from the previous 50 percent target;
  • 2040: the electric grid must operate with 100 percent zero-emission generation; and
  • 2050: cut all greenhouse gas emissions by 85 percent compared to 1990 levels and eliminate 85 percent of the State’s economywide emissions by 2050, the most stringent economywide carbon target in the country.[1]

The State already has relatively low-carbon generation compared to other states, thanks largely to four nuclear power plants and the largest hydroelectric fleet of any state in the Eastern Interconnection.[2]  In 2018, 5 percent of New York’s power was generated by solar and wind energy; but total emissions-free generation accounted for over 50 percent, with 32 percent nuclear and 22 percent hydropower.[3]  The remaining 41 percent was generated by natural-gas fired resources, largely downstate.[4]  However, with the planned retirement of Indian Point,[5] the State is expected to lose approximately 2,000 MW of nuclear generation capacity by 2021.  The other three upstate nuclear plants are also likely to retire, but not until 2030.[6]  As such, the State’s push to become a cleaner electric grid will be a challenge because these carbon-free MWhs will first need to be replaced before making incremental progress towards 100 percent carbon-free.

Also, with onshore wind development largely expected in Western New York, and load centers primarily downstate, a significant build-out of large-scale regional transmission lines will likely be required.[7]  Such transmission has historically been difficult for the state to plan, site and develop.[8]  Approximately 80 percent of the State’s over 11,000 circuit miles of bulk transmission lines entered service before 1980.[9]  Over the past two years, however, the State’s grid operator – the New York ISO – has selected three major transmission lines as part of two competitive public policy transmission solicitations following the New York Public Service Commission’s establishment of a Public Policy Transmission Need.[10]  Once complete, the projects will add the largest amount of free-flowing transmission capacity to the New York bulk power system in more than 30 years.[11]

A potential benefit of offshore wind – among others – is its proximity to New York City and Long Island.  According to an initial New York ISO assessment, the injection of up-to 2,400 MW of offshore wind downstate may be feasible considering a variety of additional injection points.[12]  Additional reviews and studies will be required given the increased State goals to identify impediments to increasing the offshore wind target.  Separately, NYSERDA is expected to announce the winners of its first offshore wind solicitation for up-to 800 megawatts of capacity soon.

New York has joined a growing list of states and other jurisdictions with 100 percent clean energy requirements, including: California, Nevada, Hawaii, Washington, New Mexico, Washington, D.C., and Puerto Rico,[13] though none as early as 2040.  Despite some early excitement at the federal level about the Green New Deal with the new U.S. Congress, new U.S. energy legislation is not expected in the near-term.  And at the federal agency level, the current U.S. Environmental Protection Agency is intent on weakening earlier attempts at clean energy and greenhouse gas reduction initiatives, including through its recent Affordable Clean Energy Rule.  With inaction at the federal level, it falls primarily to the states to advance clean energy and greenhouse gas measures.  When implemented, the Climate Leadership Community Protection Act will solidify New York as one of the leaders in clean energy policy.

[1] A 22-member Climate Action Council composed of heads of various New York state agencies, and members appointed by the Governor, the Senate, and the Assembly will create a scoping plan.  Every four years, the council will issue a comprehensive report on state greenhouse gas emissions and progress, and adjust its plan as needed.

[2] See The New York ISO Power Trends 2019, at:

[3] Id.

[4] Id.

[5] Press Release: Entergy, NY Officials Agree on Indian Point Closure in 2020-2021, Entergy, Indian Point Energy Center (June 21, 2019), at:

[6] See Order Adopting Clean Energy Standard, CASE 16-E-0270, Aug. 1, 2016, at:

[7] The New York ISO Power Trends 2019 at 19, 36 and 61-62. See also NYISO Interconnection Process (June 21, 2019), at:

[8] Id. at 18.

[9] Id.

[10] See Press Release: NYISO Board Selects Transmission Projects to Meet Public Policy Need, Apr. 8, 2019, at:; and Press Release: NYISO Selects NextEra Transmission Project to Increase Access to Hydro Power, Oct. 2017, at:

[11] New York ISO Power Trends 2019 at 60.

[12] NYISO, Offshore Wind Injection Assessment (Dec. 1, 2017), at:

[13] Sierra Club, 100% Commitments in Cities, Counties, and States (June 25, 2019), at:

The New York State Department of Environmental Conservation[1] (“NY DEC”), the state regulatory body charged with conserving, improving, and protecting New York’s natural resources and environment[2], has proposed a new rule aimed at curtailing New York’s nitrogen oxide (“NOx”) output.[3]

The United States Environmental Protection Agency, under the Clean Air Act, sets National Ambient Air Quality Standards (“NAAQS”) for harmful pollutants, including ozone.[4]   As of October 1, 2015, the eight-hour NAAQS for ozone is 0.070 ppm.[5]  Ozone comes in “good” and “bad” varieties.  “Bad” ozone is formed from a chemical reaction in which NOx is a main ingredient.[6] Continue Reading New York’s New Rule to Lower NOx Emission

New York Partner Justin Boose will serve as a panelist for an upcoming webinar, “Energy Storage Projects,” scheduled for Tuesday, May 21, at 1:00pm-EDT.

This CLE webinar will provide energy counsel guidance on effective methods in financing energy storage projects and overcoming regulatory compliance challenges in deal structures. The panel will discuss key compliance challenges impacting energy storage, effective deal structures for financing and mitigating risks, and key tax considerations in developing and financing energy storage projects. Click here to register.

Troutman Sanders Capital Projects & Infrastructure Partner, Justin Boose, will moderate a panel providing insight into Solar and Power markets during the Solar Power Finance and Investment Summit 2019 at The Omni La Costa Resort & Spa on March 19 – 21, 2019.

Continue Reading Troutman Sanders Partners to Present at Solar Power Finance and Investment Summit

In most M&A transactions, material adverse effects (MAE) clauses, are utilized in representations and warranties and closing conditions as a risk allocation tool and to narrow diligence issues. MAEs are rarely expected to be operative or used by one party to terminate a merger or acquisition agreement. One former colleague, an experienced M&A attorney, routinely waved away MAEs as largely irrelevant, saying, “I’ve never seen Bigfoot, and I’ve never seen an MAE,” emphasizing that we should save our dry powder for more important negotiated points.

However, the Delaware Court of Chancery recently found Bigfoot. In Akorn, Inc. v. Fresenius Kabi AG, C.A. No. 2018-0300-JTL (Del. Ch. Oct. 1, 2018), the Court held for the first time that a buyer properly terminated an acquisition agreement on the basis of an MAE and refused the seller’s request for specific performance of the merger agreement. In a one-page ruling on December 7, 2018, the Delaware Supreme Court affirmed the lower Court’s Akorn decision. In this article, we describe the background of Akorn, analyze the Court’s decision and provide some key takeaways for negotiating future M&A transactions under Delaware law.

Continue Reading Spotting Bigfoot: The Mythical MAE

On February 11, 2019, a group of seventeen Democrat United States Senators and Senator Bernie Sanders wrote a letter (the “2019 Letter”) to FERC Chairman Neil Chatterjee urging FERC to adopt a rule requiring Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) to open their markets to participation of aggregated distributed energy resources (“DERs”).

This 2019 Letter follows a previous, similar letter sent to then-Chairman Kevin McIntyre on May 23, 2018 by a group of most of the same Senators (the “2018 Letter”).  In April 2018, FERC held a technical conference to discuss the participation of DERs in markets operated by RTOs and ISOs, but as of this writing, has not taken any other action on the matter.

Both the 2018 Letter and the 2019 Letter referenced Order No. 841 from February 15, 2018, in which FERC required that RTOs and ISOs open their markets to participation by energy storage resources (see February 20, 2018 edition of the WER).  The Senators urged Chairman Chatterjee to adopt a similar rulemaking with regard to DERs, stating that such rulemaking would both improve the reliability and resilience of the bulk power systems and could also lower the costs for consumers.

The 2019 Letter can be found by following this link, and the 2018 Letter can be found here.

Below are summaries of the noteworthy decisions, laws and requirements impacting the commercial lending industry which occurred or took effect in 2018. Please feel free to contact us for additional information or details on any of the items listed below and/or to discuss whether updates to your loan documents may be needed to address the same.

1. New, Improved Rules for High Volatility Real Estate Loans

On May 24, 2018, President Donald Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act, which reformed the widely unpopular rules relating to high volatility commercial real estate, or HVCRE, loans. Under the new rules, only capital equal to 15 percent of the real property’s appraised, as completed value, tested at closing, is required to remain in the project, and this is only until the loan has been reclassified as a non-HVCRE ADC loan. A loan can be reclassified by a lender as a non-HVCRE ADC loan once the project has been substantially completed and has stabilized such that the cash flow generated by the project satisfies the minimum debt service requirements, in each case, using the lender’s underwriting criteria for permanent financing. In addition, in order to satisfy the borrower’s minimum capital contribution requirement, lenders can count the appraised value of the real property toward the borrower’s satisfaction of the borrower’s minimum capital contribution requirement. Moreover, any loan made prior to January 1, 2015, is excluded from the definition of an HVCRE ADC loan and lenders do not have to assign a heightened risk weight to the same. Similarly, loans for the acquisition, or refinancing of existing income-producing real property “where the cash flow being generated by the real property is sufficient to support the debt service and expenses of the real property, in accordance with the institution’s applicable loan underwriting criteria for permanent financings” are expressly excepted from the definition of an HVCRE ADC loan. The prior alert, including a detailed analysis, can be found here.

2. Delaware Limited Liability Company Act Division Statutes

Effective August 1, 2018, the Delaware Limited Liability Company Act was amended, among other things, to permit any Delaware limited liability company (LLC), to divide into two or more LLCs with the dividing LLC either surviving or ceasing to exist, pursuant to a plan of division. Upon the division becoming effective in accordance with the requirements set forth in the statute, all assets, debts, liabilities and duties, without any further action, are allocated to and vested in the division companies as specified in the plan of division, and shall not be deemed, as a result of the division, to have been assigned or transferred to such division company. In addition, unless specified in the plan of division, the dividing company is not required to wind up or will not be deemed dissolved by reason of the division. The question becomes whether representations, warranties and covenants restricting fundamental changes in existing loan documents adequately protect lenders from assets leaking outside the loan party structure when under a division, assets are not “transferred” or “assigned” and there is no consolidation, winding up or dissolution of the original entity. The statute provides some protection with respect to any LLC formed prior to August 1, 2018, that is party to any agreement entered into prior to August 1, 2018, which by its terms restricts, conditions or prohibits a merger, consolidation or transfer of assets of such LLC. In this regard, such restriction, condition or prohibition shall be deemed to apply to a division. In addition, the new law allows for an LLC’s operating agreement to provide that the LLC does not have the power to divide under such statue. As such, in addition to ensuring that appropriate restrictive language is included loan documentation entered into or amended after August 1, 2018, lenders and their counsel should require prohibitive language in an LLC’s operating agreement.

3. Compliance Required with Updated Customer Due Diligence Requirements

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued the Customer Due Diligence Requirements for Financial Institutions (CDD Rule) under the Bank Secrecy Act, which became effective July 11, 2016 with required compliance by May 11, 2018. FinCEN proffers that the CDD Rule is intended to clarify and strengthen customer due diligence requirements for certain financial institutions, including, among others, banks. The CDD rule includes four core elements: (i) “customer” identification and verification, (ii) beneficial ownership identification and verification ( i.e., any individual who owns 25% or more of, or controls, a legal entity customer at the time a new “account” is opened), (iii) understanding the nature and purpose of customer relationships to develop customer risk profiles, and (iv) ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information. The conditions precedent, representations and warranties and covenants sections of any loan agreement should be revised to reflect the CDD Rule requirements (e.g., delivery of the appropriate certification, the accuracy of the information provided therein and the covenant regarding any change to such information).

4. Default Interest Rate Provision Held Unenforceable by California Bankruptcy Court 

In July of 2018 the U.S. Bankruptcy Court of the Central District of California in In re: Altadena Crossing LLC, 2018 (Case No: 2:17-bk-14276-BB), found that a default interest provision in a loan agreement of 5.0% above the existing nondefault interest rate, which was the market default rate at the time, constitutes an unenforceable penalty. The Court concluded that default interest provisions are akin to liquidated damages under a contract and therefore must have a reasonable relationship to the anticipated actual damages foreseeable at the time of contract formation between the parties. The Court looked to Section 1671(b) of the California Civil Code to guide its analysis of the reasonableness of the relationship between the default interest provisions and the actual damages anticipated by the lender at the time of the agreement. Here, the default interest provision was found to be unenforceable because it did not have a reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach at the time the contracts were made, but rather were intended to serve as a penalty to incentivize avoidance of events of default. Although the precedential significance of the Altadena decisions remains to be seen, in the meantime, lenders should attempt to incorporate prophylactic language in their loan agreement which, among other things, acknowledges the reasonable of the default interest rate provisions.

5. Challenges to Collateral Descriptions in UCC-1 Financing Statements

In 2018, two decisions challenged the sufficiency of collateral descriptions in UCC-1 financing statements. The District Court of Puerto Rico in Fin. Oversight & Mgmt Bd. v. Altair Global Credit Opportunities Fund (A), LLC, 2018 U.S. LEXIS 140206 (D.P.R. August 17, 2018) held that a UCC-1 financing statement is ineffective to perfect a security interest if the public document to which its collateral description referred is not available at the local clerk’s office where UCC records are maintained. Here, the UCC-1 financing statement included a collateral description describing the collateral as “The pledged property described in the Security Agreement attached as Exhibit A hereto and by this reference made part hereof.” The filed financing statement attached the security agreement but did not attach the Pension Funding Bond Resolution which was incorporated by reference into the security agreement for purposes of the description of the pledged property (which was not otherwise described in the security agreement itself). The referenced Resolution was posted on several websites but was not available for review at the local clerk’s office that maintains UCC records. As such, the Court held that any search, which must extend beyond the local clerk’s office, is ipso facto too burdensome for Article 9 purposes. The prior article published in Law360, which includes a detailed analysis can be found here.

Similarly, the U.S. Bankruptcy Court for the Central District of Illinois in In re I80 Equipment, LLC, No.17-81749, 2018 WL 4006294 (Bankr. C.D. Ill. Aug. 20, 2018) held that a financing statement which contained no description of collateral within the statement itself, but instead referenced the definition of “collateral” in an underlying security agreement without attaching the security agreement to the financing statement, was insufficient to “reasonably identify” the collateral subject to the security interest pursuant to the Article 9 requirements. Accordingly, the secured party failed to protect its security interest. These decisions suggest that financing statements may be insufficient to perfect if not all applicable defined terms are specifically included on the financing statement itself or on an exhibit annexed to the financing statement.

6. Second Lien Lenders Prevail in Intercreditor Dispute

Late in the year, in In re MPM Silicones, LLC, No. 15-CV-2280 (NSR), 2018 WL 6324842(S.D.N.Y. Nov. 30, 2018), of which the opinion was amended on January 4, 2019 at 2019 WL 121003, the U.S. District Court in the Southern District of New York found in favor of second lien noteholders (collectively, the “Seconds”) in affirming the U.S. Bankruptcy Court’s dismissal of the senior lien noteholders, which includes the senior lien noteholders (collectively, the “Seniors”), claims in bankruptcy related to the Seconds’ alleged breach of the governing intercreditor agreement (“ICA”) by, among other things, (i) voting in favor of the troubled debtor’s reorganization plan that Seniors opposed, (ii) Seconds’ receipt of equity pursuant to the reorganization plan in exchange for release of claims to certain shared collateral and (iii) Seconds’ receipt of and failure to turn over certain professional fees prior to repayment in full of the senior debt. The Seniors and the Seconds held liens in shared collateral (“Common Collateral”), the priority of which was set forth in the ICA. Seniors claimed that the Seconds’ actions violated the ICA agreement provision which prohibited Seconds from taking “any action that would hinder any exercise of remedies undertaken by the [Seniors] with respect to the Common Collateral” further that each Second “waives any and all rights it … may have as a junior lien creditor or otherwise to object to the manner in which the [Seniors] seek to enforce or collect the Senior Lender Claims or the Liens granted in any of the Senior Lender Collateral.” In addition, until Seniors are repaid in full, pursuant to the ICA, the Seconds expressly agreed to not take or receive any Common Collateral or proceeds thereof in its capacity as secured creditor. In finding in favor of the Seconds with respect to the interference claim, the Courts focused on the ICA provision which provided that “notwithstanding anything to the contrary” in the ICA, the Seconds, were entitled to exercise their rights and remedies as “unsecured creditors” against the debtor. Applying principles of statutory construction, the Courts found this provision trumped any other provision of the ICA. As such, “the Seconds, when acting as unsecured creditors, have unfettered reign to act against” the debtor. In addition, with respect to the turnover claims regarding receipt of common stock and certain fees by Seconds in connection with the restructuring, the Courts found as a matter of law that such common stock did not constitute “proceeds” of the Common Collateral and that the fees were received by Seconds in their capacities as unsecured creditors. Accordingly, the ICA was not breached.

7. California Commercial Financing Disclosures: SB 1235

The California Financial Code was amended by SB 1235, which was signed into law on September 30, 2018 and became the first law to impose standardized disclosure requirements on providers of certain commercial financing transactions (including factoring, asset based and cash flow loans, open ended credit-plans and lease financing transactions) similar to those associated with consumer financing transactions such as the federal Truth in Lending Act. The new law is limited in scope and intends to target the small business owner/borrower ostensibly to protect potentially less sophisticated borrowers by requiring standardized disclosures relating to the loan. In this regard, the disclosure requirements do not apply to banks, but do extend to any bank sponsorship arrangements through an online lending platform administered by nonbank lenders. Commercial financing transactions secured by real estate are also excluded from the new law as well as loans greater than $500,000. Required disclosures include: the total amount of funds provided; the total dollar cost of the financing; the term or estimated term; the method, frequency and amount of payments; a description of prepayment policies and until January 1, 2024, the total cost of the loan expressed as an annualized rate.

8. Affirmation of Seminal Material Adverse Effect Decision

In October of 2018, the Delaware Court of Chancery upheld, for arguably the first time under Delaware law, the buyer’s termination of a merger agreement because a material adverse effect (MAE) had occurred in Akorn, Inc. v. Fresenius Kabi AG , C.A. No. 2018-0300-JTL. On December 7, 2018, the Delaware Supreme Court affirmed the Court of Chancery’s decision in respect of its MAE findings. More specifically, the Supreme Court affirmed the Court of Chancery’s decision properly applied established Delaware MAE jurisprudence and further that the factual record supported the Chancery Court’s decision with respect to (i) the sudden and sustained deterioration in the seller’s business performance constituted an MAE under the merger agreement and (ii) the seller’s false regulatory-compliance representations were reasonably expected to result in an MAE, in each case, failing to satisfy conditions to buyer’s obligations to close. Accordingly, the buyer properly terminated the merger agreement.

9. Updated GAAP Lease Accounting Standards Are Now Effective

In 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which amended the generally accepted account principles (GAAP) reporting requirements of lessees in certain leasing transactions. In short, lessees must recognize the assets and liabilities for the rights and obligations created by leases with lease terms in excess of 12 months on their balance sheets, i.e., including operating leases which were previously off balance sheet activities. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for (i) public companies, (ii) not-for-profit entities that have issued securities that are listed on an exchange or an over-the-counter market, and (iii) employee benefit plans that file financial statements with the U.S. Securities and Exchange Commission. For all other entities, the new guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The FASB response to concerns that the additional lease liabilities will cause borrowers to foot fault debt service financial covenants in loan agreements is likely to be insignificant in part because the ASU characterizes operating lease liabilities as operating liabilities rather than debt.