In re Lightning Bolt Leasing, LLC
United States Bankruptcy Court for the Middle District of Florida
Case No. 3:15-bk-05173-JAF (2016)
Lightning Bolt Leasing (Lightning Bolt) (debtor) agreed to make 48 installment payments to Central Truck Finance (Central) (creditor) for two trucks, under an agreement with a terminal rental adjustment clause (TRAC) requiring Lightning Bolt to pay Central any shortfall if the trucks sold below a set threshold price, while Lightning Bolt would receive any excess if they sold above it. After one truck was totaled and Lightning Bolt defaulted and filed bankruptcy, Central sought to lift the stay to collect insurance proceeds and repossess the other truck, and moved to compel Lightning Bolt to assume or reject the agreement; Lightning Bolt argued the agreement was actually a security agreement rather than a lease, so it couldn't be forced to assume or reject it, and both parties moved for summary judgment.
Whether a truck agreement containing a terminal rental adjustment clause, which shifts the entire risk and benefit of the property's value changes to the "lessee," constitutes a true lease or is instead a security agreement.