Seventh Circuit Issues Decision in favor of Denver in United Airlines Lease-vs-Loan Dispute 

 

 

On July 6, the U.S. Court of Appeals for the Seventh Circuit issued its opinion in United Airlines, Inc., v. HSBC Bank USA, an appeal from decisions of a bankruptcy court and a federal district court, both of which found that United's "Special Facilities and Ground Lease" with the City and County of Denver was a lease as opposed to a financing arrangement. The Seventh Circuit agreed with the decisions of the lower courts, holding that the agreement was a true lease. In two other cases involving United Airlines (at San Francisco and Los Angeles) the arrangements in question had been held to be secured loans. This case differed in several respects; most significant was the fact that the ground lease and facilities arrangements were memorialized in a single document. In response to United's argument that the financing provisions should be considered a separate agreement, the Seventh Circuit looked to Colorado law (as specified in the choice of laws section of the UA-Denver agreement) and determined that the provisions were not severable.

For more information, contact ACI-NA's Patty Hahn or James Briggs.