September 2011
1) Inadequate and defective documentation of ownership interest in a business is an all too common feature of closely held businesses and, after a dispute arise, litigation over an assert claim by adversely effected business partner’s standing (right) to sue is challenged.
The reasons for this state of affairs are many and diverse, e.g.: The owners lack a sophisticated understanding of the legal formalities involved in an ownership interest in the chosen form of business entity. The owners are unable or unwilling to spend the money for necessary legal and accounting services. The owners are family members or long-time friends who trust one another and believe they don’t need any written agreement or certification of ownership interests.
The usual issue is whether the complaining party ever became a shareholder or, if the case involves a limited liability company, ever held a membership interest. This type of dispute has been the subject of many disputes. However many variations arise.
2) A Manhattan Supreme Court granted an interim injunction restraining directors of a Delaware corporation from committing acts that constitute grounds for dissolution. The unusual preliminary injunction in a dispute between two shareholders of a New York based Delaware Corporation, requiring that the directors “not commit acts that constitute grounds for dissolution under NY law, and that corporate records are made available. The question is how does a director comply with an injunction against “oppression” of a minority shareholder?
3) Court rules that shareholder of Corporation A cannot utilize de facto merger doctrine to seek dissolution of Corporation B. The petitioner in this case sought to dissolve a corporation of which, he was not a shareholder on the theory that it had entered into a de facto merger with another corporation in which he held a 25% stock interest. A New York Supreme Court dismissed the petition, noting that the petitioner cited “no authority that would allow a court to utilize the doctrine of de facto merger to shift his shareholder interest in one corporation to another corporation for the purpose of forced dissolution of the new corporation.”
Sidney Turner
www.SidneyTurnerllc.com
Tags: entity ownership interests, New York, Palm Beach County Attorney, Proof, Proof of Ownership, proper Documention, Sidney Turner, South Florida
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September 2011
It is not uncommon for taxpayers seeking bankruptcy advice about tax liabilities to be told that taxes are not dischargeable. However, while generally they are non dischargeable such statements are incorrect . While there are a number of complex rules that need to be satisfied, taxpayers should know that Federal Income Taxes may be dischargeable if the tax liability satisfies the Bankruptcy code requirements:
There are two primary types of bankruptcy available for individuals: liquidation under Chapter 7 and Chapter 13. For individuals with significant debts above the statutory limits in these types of bankruptcy there is the availability of chapter 11. In a Chapter 7, also commonly known as “liquidation” all of taxpayers’ assets and liabilities are administered by the bankruptcy court. Except to the extent of exempt assets as provided under applicable law, all of taxpayer’s assets are liquidated and distributed to creditors pursuant to the bankruptcy code. At the end of the process, the taxpayer is allowed to keep the exempt assets and have certain debt discharged. On the other hand, in a Chapter 13, also known as “wage earner” payment plan, the bankruptcy court may require that payments be made to the IRS given its priority status as a creditor; or as a general unsecured creditor if the IRS fails to file a tax lien to “perfect” its secured interest against the taxpayer’s assets.
Generally, taxpayer may discharge federal income taxes, depending on the age of the debt. Thus, they may be dischargeable in a Chapter 7 if ALL of the following criteria are met.
1. The tax is for a year for which a tax return is due more than 3 years prior to the filing of the bankruptcy petition;
2.A tax return was filed more than two years prior to the filing of the bankruptcy petition;
3.The tax was assessed more than 240 days prior to filing of the bankruptcy petition;
4.In addition, the tax must not be due to a fraudulent tax return, nor did the taxpayer attempt to evade or defeat the tax.
The taxpayer who contemplates bankruptcy should consult with a professional who understands the nuances of the dischargeability of taxes as provided under the bankruptcy code. Because there are so many timing rules that have to be complied with, the timing of filing the bankruptcy petition is crucial in order to obtain the desired fresh start through the bankruptcy process.
Sidney Turner
www.SidneyTurnerllc.com
Tags: Bankruptcy, Bankruptcy Alternatives, bankruptcy process, Boca Raton Bankruptcy Attorney, Chapter 11 Bankruptcy, dischargeability of taxes, Sidney Turner, South Florida
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August 2011
“Time is money,” Benjamin Franklin once famously said, creating one of the most enduring adages in the American business world.
The cliché, of course, refers to the opportunity cost of lost time and to the ideas that costs are incurred as time passes and that revenue cannot be generated through idleness.
A key take-away from the phrase is this: the longer something takes in the process, the more it costs.
Specifically in cases that involve liquidating a company’s assets, an equally important corollary comes to mind: the longer it takes to liquidate an asset, the lower the recovery will be.
Performing tasks in parallel rather than in sequence is a method often used by healthy businesses to get more done sooner.
This same method of operating works in adverse situations, too.
Sidney Turner
www.SidneyTurnerllc.com
Tags: Banks, Boca Raton Bankruptcy Attorney, breached Contracts, Broward County Attorney, Broward County Circuit Court, Business Reorganization, Corporate Contracts, longer it takes more it costs, Parallel Processes, Sidney Turner, South Florida, Time is Money
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August 2011
How is the valuation of a business interest effected by the fact of lack of marketability in a closely held business, or Discount Lack Of Marketability (DLOM )?
A DLOM’s basic premise is that shares of a closely held corporation cannot be readily sold on a public market and therefore should be discounted to reflect the additional risk factors associated with the time and difficulty of finding buyers for non-publicly traded shares.
Sidney Turner
www.SidneyTurnerllc.com
Tags: Bankruptcy Alternatives, Banks, Borrowers, breached Contracts, Broward County Attorney, Broward County Circuit Court, Business Reorganization, Business Selling Process, Business Valuation, Comercial Leases, Corporate Contracts, Limited Liability Company, New York, Palm Beach County Attorney, Sidney Turner, South Florida
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July 2011
Inadequate and defective documentation of ownership interest in a business is an all too common feature of closely held businesses and, after a dispute arise, litigation over an assert claim by adversely effected business partner’s standing (right) to sue is challenged.
The reasons for this state of affairs are many and diverse, e.g.:
- The owners lack a sophisticated understanding of the legal formalities involved in an ownership interest in the chosen form of business entity.
- The owners are unable or unwilling to spend the money for necessary legal and accounting services.
- The owners are family members or long-time friends who trust one another and believe they don’t need any written agreement or certification of ownership interests.
These circumstances should not deter you from investing in the required documentation. Make sure you get the proper documentation and protect your interest.
Sidney Turner
www.SidneyTurnerllc.com
Tags: Boca Raton Bankruptcy Attorney, breached Contracts, Broward County Attorney, Broward County Circuit Court, Business Interest, Business Ownership, Business Reorganization, Chapter 11 Restructuring, Corporate Contracts, Ft. Lauderdale Bankruptcy, Palm Beach County Attorney, Sidney Turner, South Florida
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July 2011
Jean Georges a famous chef and a restaurateur in talking about his job there “are different jobs;
One is about pleasing people with what’s on the plate; the other is about understanding the market.
I’m a chef, but I think I’m a savvy businessperson, too. The toughest decision is always whether to open a restaurant.
Two or three bad months, and you could be out of business. You don’t do a business for pleasure- You have to make money.
The hardest decision is to close one that is not making money.
That was painful; each restaurant is like a family business.
Sidney Turner
www.SidneyTurnerllc.com
Tags: Boca Raton Bankruptcy Attorney, Business, Business Reorganization, Entrepreneurs, Making Money, Need to make money, Not for Fun, Sidney Turner, South Florida
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July 2011
Here is Number SIX of the Six Major Points Series
I handle corporate workouts, reorganizations and dissolutions and other types of disputes among co-owners of privately owned companies, in other words I advise clients when they are experiencing adverse business situations.
But what does it really mean to be a business lawyer handling dissolution and other types of disputes among co-owners or adverse business situations? Does it require a special temperament and skill set? Here’s my take on the answers to these questions:
It Means understanding business and the relationships that make it work.
This is the Sixth of the Six Major Points Series
Number SIX of the Six Major Points Series
It Means Knowing the Purposes and Limitations of Litigation. When I give presentations on business workouts and reorganizations, I tell the audience that the vast majority of cases involving a viable business ultimately leads to a buyout settlement, and that it’s only a question of how much time, distraction and legal expense the parties are willing to bear before they realize that the legal system is not an efficient or even wise way to decide the fate of a living, breathing company. However, for many different reasons litigation can be an unavoidable and necessary tactic in reaching the strategic goal of separating business partners who no longer can co-exist as owners and managers. Sometimes there’s just no other way to grab the attention of the other side. The litigation will take its normal, unpredictable course. The parties’ expectations of a quick resolution are undermined by many delays and procedural and discovery skirmishes attendant to all litigation. As the case drags on and the legal costs mount, the clients begin to reassess the costs and benefits of a buyout settlement.
The business lawyer must be willing to take the lead in re-evaluating and advising the client of litigation and settlement prospects at every stage of the engagement.
If you missed any please check out my other blog postings
Sidney Turner
www.SidneyTurnerllc.com
Tags: Boca Raton Bankruptcy Attorney, Business Reorganization, Limitations of Litigation, Limited Liability Company, LLC, New York, Purposes of Litigation, Sidney Turner, South Florida, strategic goal of separating business partners
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July 2011
Here is Number FIVE of the Six Major Points Series
I handle corporate workouts, reorganizations and dissolutions and other types of disputes among co-owners of privately owned companies, in other words I advise clients when they are experiencing adverse business situations.
But what does it really mean to be a business lawyer handling dissolution and other types of disputes among co-owners or adverse business situations? Does it require a special temperament and skill set? Here’s my take on the answers to these questions:
It Means understanding business and the relationships that make it work.
This is the Fifth of the Six Major Points Series:
Number FIVE of the Six Major Points Series
It Means Understanding Valuation Basics. In many instances, by the time lawyers are brought into the picture the relationship between the business owners has deteriorated past the point of no return. If it’s a viable business, one or the other is going to have to be bought out. The single biggest impediment to amicable resolution becomes the disparate views of the company’s value as seen through the very different lenses being worn by the potential purchaser and the potential seller. The business lawyer is not a business appraiser, but he or she must be able to elevate the client’s understanding of basic appraisal approaches and methodology, along with any applicable legal concepts such as the case-law-driven rules surrounding minority and marketability discounts in “fair value” buyout proceedings. The lawyer’s grasp of appraisal doctrine becomes even more critical when collaborating with a professional business appraiser who has been engaged to prepare a valuation report and to testify as an expert at a valuation hearing. The business lawyer must be able to speak the language of appraisal and understand its doctrinal basis to put on a persuasive valuation case.
If you missed any please check out my other blog postings
Sidney Turner
www.SidneyTurnerllc.com
Tags: Asset Sale, Boca Raton Bankruptcy Attorney, Business Reorganization, Corporate Contracts, Fair Market Values, Impartial Judgement, Limited Liability Company, LLC, loans, Market Valuation, New York, No Bias, Palm Beach County Attorney, Sidney Turner, South Florida
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July 2011
In New York, after 33 years of marriage, couple divorced in 2006. They agreed to split their considerable wealth equally. She got the apartment; he got the house.
More than two years later, W received a voicemail message that stunned her: H wanted to revise their settlement. W refused, and H sued.
When the couple split their assets evenly, the largest chunk of money was invested with Mr. Madoff. H kept much of his funds in the Madoff account, which was held in his name. W, who said she had no interest in investing with Madoff, received her settlement proceeds in cash.
Shortly after Madoff admitted wrongdoing in December 2008, H, filed court papers to drastically alter the terms of his divorce settlement.
W, he argued in the lawsuit, should be required to turn over millions of dollars that she had received in their settlement to make up for the substantial losses he had sustained in the fraud. H began arguing that he and W were mistaken about the existence of the account. “There was in fact no account and no securities or other assets,”
A ruling in this case would only have a direct effect on New York’s laws, but a decision by the influential court could influence how judges interpret laws in other states.
Sidney Turner
www.SidneyTurnerllc.com
Tags: After Divorce decision, Boca Raton Bankruptcy Attorney, Broward County Attorney, New York, Revisit a Divorec settlement, Sidney Turner, South Florida
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July 2011
Here is Number FOUR of the Six Major Points Series
I handle corporate workouts, reorganizations and dissolutions and other types of disputes among co-owners of privately owned companies, in other words I advise clients when they are experiencing adverse business situations.
But what does it really mean to be a business lawyer handling dissolution and other types of disputes among co-owners or adverse business situations? Does it require a special temperament and skill set? Here’s my take on the answers to these questions:
It Means understanding business and the relationships that make it work.
This is the Forth of the SIX Major Points Series
Number FOUR of the Six Major Points Series
It Means Understanding Finance and Accounting Basics. Almost every business divorce case involves some degree of dispute over company finances and accounting. Many small companies involved in business litigation do not prepare any financial statements; much less do they have an outside CPA who prepares audited financial statements. The company’s tax returns may present a distorted picture of the company’s income, compensation to principals, and other expenses. A business lawyer must have a basic understanding of financial and tax accounting, including the ability to comprehend financial statements, internal reports such as QuickBooks, and (last but not least) tax returns, in order to converse intelligently with the client and the client’s accountant about financial issues that likely will take center stage in the litigation.
If you missed any please check out my other blog postings
Sidney Turner
www.SidneyTurnerllc.com
Tags: Accounting, Bankruptcy Alternatives, Boca Raton Bankruptcy Attorney, Business Reorganization, Debt Ratios, Finance, Ft. Lauderdale Bankruptcy, Incom and Expense, Limited Liability Company, LLC, loans, New York, Palm Beach County Attorney, Profit and Loss, Sidney Turner, South Florida, tentant bankruptcy
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