New Jersey § 58:10-23

§ 58:10-23.

For purposes of sections 1 through 5 of P.L.1993, c. 112 ( C.58:10-23.11g4 through 58:10-23.11g8 ) : “ Active participation in the management ” or “ participation in the management ” means actual participation in the management or operational affairs by the holder

of the security interest and shall not include the mere capacity, or ability to influence,

or the unexercised right to control vessel , facility , or underground storage tank facility operations. (1) A holder of a security interest shall be considered to be in active participation

in the management, while the borrower is still in possession, only if the holder either: (a) exercises decision making control over the borrower's environmental compliance,

such that the holder has undertaken responsibility for the borrower's waste disposal

or hazardous substance handling practices; or (b) exercises control at a level comparable to that of a manager of the borrower's

enterprise, such that the holder has assumed or manifested responsibility for the

overall management of the enterprise encompassing the day-to-day decision making of

the enterprise with respect to: (i) environmental compliance; or (ii) all, or substantially all, of the operational (as opposed to financial or administrative)

aspects of the enterprise other than environmental compliance. Operational aspects of the enterprise include functions such as that of facility manager, underground storage tank facility manager, or plant manager, operations manager, chief operating officer, or chief executive

officer. Financial or administrative aspects include functions such as that of credit manager,

accounts payable or receivable manager, or both, personnel manager, controller, chief

financial officer, or similar functions. (2) No act or omission prior to the time that indicia of ownership are held primarily

to protect a security interest constitutes evidence of participation in management. A prospective holder who undertakes or requires an environmental inspection of the

vessel , facility , or underground storage tank facility in which indicia of ownership are to be held, or requires a prospective borrower

to clean up a vessel , facility , or underground storage tank facility or to comply or come into compliance (whether prior or subsequent to the time that

indicia of ownership are held primarily to protect a security interest) with any applicable

law or regulation, is not by such action considered to be participating in the vessel's , facility's , or underground storage tank facility's management, provided however, that a holder shall not be required to conduct or require

an inspection to qualify for the protection for holders granted pursuant to sections

1 through 5 of P.L.1993, c. 112 ( C.58:10-23.11g4 through 58:10-23.11g8 ) , and the liability of a holder shall not be based on or affected by the holder not

conducting or not requiring an inspection. (3) Actions that are consistent with holding ownership indicia primarily to protect

a security interest do not constitute participation in management for purposes of

sections 1 through 5 of P.L.1993, c. 112 ( C.58:10-23.11g4 through 58:10-23.11g8 ) . The authority for the holder to make such actions may, but need not, be contained

in contractual or other documents specifying requirements for financial, environmental,

and other warranties, covenants, conditions, representations or promises from the

borrower. Loan policing and work out activities cover and include all activities up to foreclosure

and its equivalents. (a) A holder who engages in policing activities prior to foreclosure shall remain

within the exemption provided that the holder does not by such actions participate

in the management of the vessel , facility , or underground storage tank facility . Such actions include, but are not limited to, requiring the borrower to clean up

the vessel , facility , or underground storage tank facility during the term of the security interest; requiring the borrower to comply or come

into compliance with applicable federal, State, and local environmental and other

laws, rules and regulations during the term of the security interest; securing or

exercising authority to monitor or inspect the vessel , facility , or underground storage tank facility (including on-site inspections) in which indicia of ownership are maintained, or

the borrower's business or financial conditions during the term of the security interest;

or taking other actions to adequately police the loan or security interest (such as

requiring a borrower to comply with any warranties, covenants, conditions, representations

or promises from the borrower). (b) A holder who engages in work out activities prior to foreclosure and its equivalents

shall remain within the exemption provided that the holder does not by such action

participate in the management of the vessel , facility , or underground storage tank facility . For purposes of this act, “work out” refers to those actions by which a holder,

at any time prior to foreclosure and its equivalents, seeks to: prevent, cure, or

mitigate a default by the borrower or obligor; or preserve or prevent the diminution

of the value of the security. Work out activities include, but are not limited to: restructuring or renegotiating

the terms of the security interest; requiring payment of additional rent or interest;

exercising forbearance; requiring or exercising rights pursuant to an assignment

of accounts or other amounts owing to an obligor; requiring or exercising rights

pursuant to an escrow agreement pertaining to amounts owing to an obligor; providing

specific or general financial or other advice, suggestions, counseling, or guidance;

and exercising any right or remedy the holder is entitled to by law or under any warranties,

covenants, conditions, representations or promises from the borrower. (4) A holder does not participate in the management of a vessel , facility , or underground storage tank facility by making any response or performing any response action or undertaking any cleanup

or removal or similar action under the federal “Comprehensive Environmental Response,

Compensation, and Liability Act of 1980,” Pub.L. 96-510 ( 42 U.S.C. s.9601 et seq. ), the “Spill Compensation and Control Act,” P.L.1976, c. 141 ( C.58:10-23.11 et seq. ), P.L.1986, c. 102 ( C.58:10A-21 et seq. ), or any other State or federal environmental law or regulation. “ Date of foreclosure ” means the date on which the holder obtains legal or equitable title to the vessel

or facility pursuant to or incident to foreclosure. “ Fair consideration ” means the value of the security interest when calculated as an amount equal to or

in excess of the sum of the outstanding principal (or comparable amount in the cases

of a lease that constitutes a security interest) owed to the holder immediately preceding

the acquisition of full title (or possession in the case of property subject to a

lease financing transaction) pursuant to foreclosure and its equivalents, plus any

unpaid interest, rent or penalties (whether arising before or after foreclosure and

its equivalents), plus all reasonable and necessary costs, fees, or other charges

incurred by the holder incident to work out, foreclosure and its equivalents, retention,

maintaining the business activities of the enterprise, preserving, protecting and

preparing the vessel , facility , or underground storage tank facility prior to sale, re-lease of property held pursuant to a lease financing transaction

(whether by a new lease financing transaction or substitution of the lessee) or other

disposition, plus response costs incurred under applicable federal or State environmental

cleanup laws or regulations, or at the direction of an on-scene coordinator, less

any amounts received by the holder in connection with any partial disposition of the

property, net revenues received as a result of maintaining the business activities

of the enterprise, and any amounts paid by the borrower subsequent to the acquisition

of full title (or possession in the case of property subject to a lease financing

transaction) pursuant to foreclosure and its equivalents. In the case of a holder maintaining indicia of ownership primarily to protect a

junior security interest, fair consideration is the value of all outstanding higher

priority security interests plus the value of the security interest held by the junior

holder, each calculated as set forth in this definition. “ Foreclosure ” or “ foreclosure and its equivalents ” means purchase at foreclosure sale; acquisition or assignment of title in lieu

of foreclosure; termination of a lease or other repossession; acquisition of a right

to title or possession; an agreement in satisfaction of the obligation; or any other

form or informal manner (whether pursuant to law or under warranties, covenants, conditions,

representations or promises from the borrower) by which the holder acquires title

to or possession of the secured property. “ Holder ” is a person who maintains indicia of ownership primarily to protect a security interest. A holder includes the initial holder (such as a loan originator), any subsequent

holder (such as a successor-in-interest or subsequent purchaser of the security interest

on the secondary market), a guarantor of an obligation, surety, or any other person

who holds ownership indicia primarily to protect a security interest, or a receiver

or other person who acts on behalf or for the benefit of a holder. “ Indicia of ownership ” means evidence of a security interest, evidence of an interest in a security interest,

or evidence of an interest in real or personal property securing a loan or other obligation,

including any legal or equitable title to real or personal property acquired incident

to foreclosure and its equivalents. Evidence of such interests include, but are not limited to, mortgages, deeds of

trust, liens, surety bonds and guarantees of obligations, title held pursuant to a

lease financing transaction in which the lessor does not select initially the leased

property (hereinafter “lease financing transaction”), legal or equitable title obtained

pursuant to foreclosure and their equivalents. Evidence of such interests also includes assignments, pledges, or other rights to

or other forms of encumbrance against property that are held primarily to protect

a security interest. A person is not required to hold title or a security interest in order to maintain

indicia of ownership. “ Primarily to protect a security interest ” means that the holder's indicia of ownership are held primarily for the purpose

of securing payment or performance of an obligation but does not include indicia of

ownership held primarily for investment purposes, nor ownership indicia held primarily

for purposes other than as a protection for a security interest. A holder may have other, secondary reasons for maintaining indicia of ownership,

but the primary reasons why any ownership indicia are held shall be as protection

for a security interest. “ Security interest ” means an interest in a vessel or facility created or established for the purpose

of securing a loan or other obligation. Security interests include, but are not limited to, mortgages, deeds of trusts,

liens, and title pursuant to lease financing transactions. Security interests may also arise from transactions such as sale and leasebacks,

conditional sales, installment sales, trusts receipt transactions, certain assignments,

factoring agreements, accounts receivable financing arrangements, and consignments,

if the transaction creates or establishes an interest in a vessel or facility for

the purpose of securing a loan or other obligation. “Underground storage tank” shall have the same meaning as set forth in section 2 of

P.L. 1986, c. 102 ( C.58:10A-22 ). “Underground storage tank facility” shall mean one or more underground storage tanks.