Abstract: In one aspect, the invention comprises a method comprising the steps of: (a) specifying a reference entity which is an obligor with respect to preferred securities; (b) defining a credit event to include deferral of dividend or coupon on the preferred securities; (c) specifying a payoff to include the preferred securities, the payoff to be made following the credit event; (d) specifying a premium; (e) executing an agreement with a protection buyer, wherein the agreement comprises terms based on the reference entity, the credit event, and the payoff, and wherein the protection buyer agrees to pay the premium in return for a promise to provide the payoff to the protection buyer upon occurrence of the credit event; and (f) receiving the premium from the protection buyer.
You can download the pdf patent copy here, just cut paste that opening line number ID into the blank. Do that, and you will see ten [10] listed individuals as coinventors of this wonderful thing; assignee, Lehman Brothers Inc., New York, NY.
While it is noteworthy that the abstract has the promise exchanged for the premium, it does not have the promise being made good if the triggering credit default event happens. Hum, now that is interesting. The actual patent is less circumspect that way, but solvency to perform the promise is a precondition to the promise being performed - and that's always so. And that patent, at its present "intellectual property" value, is probably an asset before the bankruptcy judge, so go price it.
Here's a deal. You, and me, as in that patent abstract, somewhat paraphrased:
In one aspect, we agree on mutual promises comprising the steps of: (a) specifying a reference entity, the parking ramp next to Ramsey's City Hall, and your right to receive all parking fee proceeds therefrom; (b) defining a credit event to include failure to receive all fee proceeds; (c) specifying a payoff to be transferal to you of a quit claim deed from me conveying you my ownership interest, present and future acquired, if any, in the ramp, the payoff to be made following the credit event - your failure to receive parking proceeds; (d) specifying a premium - you pay me a thousand a month; (e) executing an agreement with a protection buyer, you, wherein the agreement comprises terms based on the reference entity, the ramp, the credit event, your not getting parking proceeds, and the payoff, my deed to you, and wherein the protection buyer agrees to pay the premium in return for a promise to provide the payoff to the protection buyer upon occurrence of the credit event; and (f) receiving the premium from the protection buyer.
I would go even further, I would at the start willingly tender into escrow my quitclaim deed on the ramp so that you would not have to pursue me later and risk not finding me in hiding - you need only go to the escrow holder if the "credit event" happens; and I would even agree you could demand the escrow holder release the deed if any fee payment becomes more than 90 days overdue, rather than leaving timeframe open and subject to dispute in litigation.
What a deal. Any takers? Any problems?