Union Tank v. NuDevco Partners — Lease Guaranty Agreement Not Covered by the UCC Appellate Court Rules — Chicago Uniform Commercial Code Attorneys Near Oak Brook

When a holding company guaranteed lease that a subsidiary assumed for railcars, and then failed to honor guaranty when subsidiary defaulted on the lease, judgment in favor of railcar supplier was affirmed. The appellate panel found that the holding company’s guaranty was a contract to pay a debt, not a lease for goods or services, and the Uniform Commercial Code did not apply as a result. In January 2003, Ponderosa Petroleum Company entered into a lease with General Electric Railcar Services Corporation for 47 railcars to carry crude petroleum. Over the next several years, the companies executed several riders to the lease agreement extending the term of the lease agreement. The last extension gave the agreement a termination date of February 2020. In April 2015, Associated Energy Services, a wholly owned subsidiary of NuDevco Partners Holdings, assumed the obligation to make payments under the lease, though Ponderosa remained the party to the lease. In September 2015,…

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