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Omni Leasing borrows money from Delta Financial on a nonrecourse basis to buy $250,000 of equipment from Alpha Equipment Sales. Omni then leases that equipment
Omni Leasing borrows money from Delta Financial on a nonrecourse basis to buy $250,000 of equipment from Alpha Equipment Sales. Omni then leases that equipment to Ajax Industrial Products. After six months, Ajax defaults on the lease. As a result,: Multiple Choice Ajax will return the equipment to Alpha and Alpha will pay the remaining lease payments to Omni. Omni will repossess the equipment which it can then sell to meet its debt obligation to Delta. Omni is forced to make loan payments on equipment which is no longer producing income for the firm. Delta Financial must collect the loan payments it is due from Ajax instead of from Omni. Ajax keeps the equipment, Omni is freed from its debt, and Delta bears the entire loss with no option for recovery
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