Non-Recourse Debt

6 Months Ended

Jun. 30, 2024

5. Non-recourse debt:

At June 30, 2024, non-recourse debt consists of notes payable to financial institutions. The note payments are due in monthly installments. Interest on the notes range from 3.97% to 4.66% per annum. The notes are secured by assignments of lease payments and pledges of assets. At June 30, 2024, gross operating lease rentals totaled approximately $442 thousand over the remaining lease terms and the carrying value of the pledged assets was $1.3 million. The notes mature from 2024 through 2028.

The non-recourse debt does not contain any material financial covenants. The debt is secured by a lien granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders have recourse only to the following collateral: the specific leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items. The non-recourse obligation is payable solely out of the respective specific security and the Company does not guarantee (nor is the Company otherwise contractually responsible for) the payment of the non-recourse debt as a general obligation or liability of the Company. Although the Company does not have any direct or general liability in connection with the non-recourse debt apart from the security granted, the Company is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lenders, such as warranties as to genuineness of the transaction parties’ signatures, as to the genuineness of the respective lease chattel paper or the transaction as a whole, or as to the Company’s good title to or perfected interest in the secured collateral, as well as similar representations, warranties and covenants typically provided by non-recourse borrowers and customary in the equipment finance industry, and are viewed by such industry as being consistent with non-recourse discount financing obligations. Accordingly, as there are no financial covenants or ratios imposed on the Company in connection with the non-recourse debt, the Company has determined that there are no material covenants with respect to the non-recourse debt that warrant footnote disclosure.

Future minimum payments of non-recourse debt are as follows (in thousands):


	Principal		Interest		Total
Six months ending December 31, 2024	$	99	$	8	$	107
Year ending December 31, 2025		73		13		86
2026		76		9		85
2027		79		6		85
2028		77		2		79
	$	404	$	38	$	442

ATEL 17, LLC 10-Q