The post Common reasons for partnership disputes appeared first on Pendergraft & Simon L.L.P..
]]>It may help you to consider some of the reasons for disputes in advance. This way, you can consider what action you want to take and what to expect. Preparation may help you find a solution more quickly and get things back on track.
With this in mind, consider these three main causes of disputes:
No matter why you find yourself in a dispute, you must know what steps to take to settle it.
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]]>The post Medical debt can negatively affect both your financial stability and your health appeared first on Pendergraft & Simon L.L.P..
]]>Medical bills can often set off a chain reaction that can compound your problems.
The Sycamore Institute conducted a research project on how medical debt affects people’s health. The findings were placed into four categories: Social and economic, physical environment, unhealthy behavior and ongoing access to clinical care. Let’s take a closer look at what the study teaches us about the problems associated with medical debt:
These are not the only impacts that medical debt can have, but they are something to consider if you’re investigating bankruptcy as an option. Filing for bankruptcy can help you reverse the downward spiral you may be in due to your health. It can be helpful to have an advocate that is experienced in Texas bankruptcy laws by your side. Be encouraged, hard times don’t last forever.
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]]>The post Can a Chapter 11 bankruptcy help save your business? appeared first on Pendergraft & Simon L.L.P..
]]>In a Chapter 11 bankruptcy, your business needs to submit a plan of reorganization. This reorganization plan needs to be approved by the court and your creditors. The goal is to set up a schedule to repay debts, cut expenses and find a way to emerge from bankruptcy in which the business will begin bringing in a profit.
During a Chapter 11 bankruptcy, you need to submit:
By listing out these items, the court can look at the state of the business to determine if a suggested reorganization plan is acceptable. Usually, you will need to submit a disclosure statement with that plan of reorganization, so that the creditors who will look at the plan can decide if they agree or not.
It’s possible. Although many employers want to keep all of their employees working throughout the Chapter 11 bankruptcy, there is a chance that you will need to cut costs by laying off or terminating employees. For example, if your business has six employees but four would be able to cover the workload, two of the employees could be let go to save the company money until the company could afford to bring them back when profits are higher.
If reorganizing won’t make enough of a difference to make the business profitable, it may be time to consider shutting down. This is something to discuss with your legal team as you go through the process of determining the best option for saving your business.
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]]>The post What options do you have if a shareholder dispute arises? appeared first on Pendergraft & Simon L.L.P..
]]>Shareholders get something out of investing funds in a growing business. As the company’s owner, you have to answer to your shareholders once you introduce them into the mix.
The emergence of disputes between shareholders and company owners isn’t uncommon. They often happen because shareholders aren’t content with your company’s operation. Having a shareholder agreement that addresses a few different details is key to keeping conflict to a minimum.
One option for minimizing stakeholder and company owner disputes is checking and seeing if the shareholder agreement contains a clause requiring minority stakeholders to sell off their shares. Many shareholder agreements contain these to limit the minority from restricting the majority from acting in desirable circumstances (such as offering them an ideal buyout offer).
Your shareholder agreement should also address what should happen if one of your stakeholders wishes to go their own way. Your agreement needs to define how you will assign a valuation to their shares and who will have priority status to buy them.
Litigation can be both time-consuming and costly. Mediation may be less time and cost-intensive than this. You’ll need to include terms and conditions requiring the use of mediation to resolve your differences with shareholders. This option gives you the best chance of reaching an agreement that you both can feel comfortable with.
Not all shareholder agreements are the same. You’ll need to review your contract to see what rights it affords you and your stakeholders when disputes arise. Understanding legal agreements can be challenging, so learn everything you can about your options.
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]]>The post Can your business sue another for unfair competition? appeared first on Pendergraft & Simon L.L.P..
]]>The federal and state laws regarding unfair competition aim to protect intellectual, economic or creative interests. They do so by preventing companies from misappropriating another’s work and representing it as their own. You might have a right to various remedies if someone subjected your company to unfair competition.
Unfair competition encompasses many different economic torts, including trademark infringement, the unauthorized substitution of a brand’s product(s), misappropriation of trade secrets, false advertising and false representation of products or services.
The basis for unfair competition exists in the United States Constitution under Article 1, Section 8, Clause 3, known as the Commerce Clause. §43(a) of the Lanham Act, 15 U.S.C. §1125(a), deals with copyrights, trademarks and false advertising. It gives business owners the right to sue others for violating those statutes. The Uniform Trade Secrets Act aims to protect the misappropriation of trade secrets and regulate against counterfeit goods.
Each state has statutes on the books outlining remedies that plaintiffs can pursue when unfair competition occurs. These remedies may include monetary damages as well as injunctive relief to restrain a company or person from further violations and cease and desist their unlawful practices.
Monetary damages may range depending on the number of violations and the degree of seriousness of the misconduct. As far as the latter is concerned, the court may consider how long the misconduct has occurred and whether it was willful. The judge may also consider how many assets, liabilities and net worth that the defendant has.
If you have been the victim of unfair competition, then you may be entitled to monetary damages or injunctive relief. Each case and resolution is different. You can get legal help to determine if you have a viable unfair competition claim and go over your options.
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]]>The post How the Supreme Court helped affirm secured lender rights appeared first on Pendergraft & Simon L.L.P..
]]>Of course, lenders also take substantial risks by choosing to extend credit to other people. Those individuals might refuse to pay by defaulting on the loan. Lenders who secure the funds that they offer by attaching them to physical assets like vehicles or real estate have a bit more protection when borrowers don’t pay.
They can either reclaim the property or use its role as collateral to convince someone to repay a debt. Secured lenders can still take losses sometimes, especially if a borrower files for bankruptcy. However, the Supreme Court recently upheld the rights of secured lenders even in bankruptcy proceedings.
The Supreme Court heard a case earlier this year involving the city of Chicago and people who have lost their vehicles because of unpaid tickets and fines. There were four separate vehicles that the city seized due to unpaid amounts owed by the vehicle owners.
Each of those owners then independently filed bankruptcy and demanded that the city return their vehicles. Initially, lower courts agreed that the city had to return the vehicles. However, the Supreme Court found that those with a security interest in collateral property do not violate the automatic stay in bankruptcy by repossessing the vehicle before someone files.
Understanding how bankruptcy law and court precedents may affect your rights as a lender can help you advocate for yourself when a borrower files for bankruptcy.
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]]>The post Can you give preference to certain creditors in a bankruptcy? appeared first on Pendergraft & Simon L.L.P..
]]>Section 547 of the Bankruptcy Code aims to prevent people in bankruptcy or about to go into bankruptcy, picking who they pay. It seeks to ensure that all creditors are treated the same during bankruptcy proceedings. While the court can give some creditors preference, you cannot.
Let’s say you own a restaurant and will have to shut up shop due to a disastrous last year. You have good reason to want to pay some people before others. For example, you know that Bob, your fresh fish supplier needs the $3,000 you owe him much more than the large kitchen outfitter needs the $20,000 you owe them for the new kitchen they supplied. What’s worse, Bob is married to your sister, whereas the kitchen outfitters are an out-of-state company you have no personal relationship with.
If you pay Bob his $3,000, he might not get to keep it. The trustees appointed to handle your bankruptcy may issue a bankruptcy preference claim to reclaim it. They can do so if specific circumstances apply. These include:
Understanding what you can and cannot do in bankruptcy is complex. Getting it wrong could create further complications for you and those you work with.
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]]>The post What is the difference between a merger and an acquisition? appeared first on Pendergraft & Simon L.L.P..
]]>How do you know which is which? One way is to look at the restructuring that does nor does not happen after the transaction is made.
For instance, say that Company A sees little change at the top. The business runs the same way and the same individuals are in charge. This is probably an acquisition. Company B bought Company A for some reason, such as getting access to its intellectual property, but no one at Company B really wants to run Company A. They approve of how it was being run and just want to benefit from it by owning it as a parent company.
On the other hand, imagine that Company A is purchased and then sees significant change. Old executives leave. New executives take over. Some are brought in from the outside and some are transferred over. This is likely a merger. Company B is combining itself and Company A at a fundamental level and taking that company over. This is much different than simply owning it. They’re making massive changes to how it functions.
Both tactics can work to make a business better, depending on the situation. The key is simply to know how both mergers and acquisitions work, how they differ, and how to navigate that situation as you move forward with your goals. An experienced attorney can help you navigate these unfamiliar situations with greater clarity and ease.
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]]>The post Can you eliminate your rent costs in a business bankruptcy? appeared first on Pendergraft & Simon L.L.P..
]]>Whether you hope to continue the company or need to shut it down, it’s likely that the rent you paid for your commercial facilities is among your most expensive ongoing business obligations. You may pay hundreds or thousands of dollars per month for space, as well as common area maintenance fees for parking lots, bathrooms and security shared with other businesses.
When your revenue drops, meeting those costs every month can prove an impossible hurdle for your company. Is it possible to eliminate commercial lease obligations in a business bankruptcy?
Under federal bankruptcy law, companies have to make decisions about executory contracts that have future obligations for the business. Rental contracts fall into this category. Typically, commercial tenants filing for bankruptcy will either need to assume or reject the lease.
If they assume the lease, they can negotiate terms with the landlord to repay past due rent or make other arrangements that minimize the impact on the landlord. Sometimes, landlords can be flexible with tenants trying to regain financial control; other times, they are less helpful. If the landlord won’t work with you, rejecting the lease might be the better option.
If the business rejects the lease, the obligations under the lease will end. However, the landlord still may be able to bring a claim against the tenant for a portion of the past due rent and future rent owed under the contract. A review of the lease will give you a better idea about how much a landlord could claim if you choose to reject your lease during bankruptcy proceedings. The kind of bankruptcy that you file will also impact what claims the landlord can bring against you.
Navigating bankruptcy when your company either needs to cease operations or restructure to keep doing business often requires support. The better you understand the process, the easier it will be to maximize the benefits you derive from your filing.
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]]>The post How does an automatic stay work in bankruptcy? appeared first on Pendergraft & Simon L.L.P..
]]>Filing bankruptcy puts a stop to the collection attempts that you’re dealing with. When you file, the court issues an automatic stay. This is an order that prevents creditors from trying to contact you. This ceases phone calls, letters, in-person visits and all other efforts.
Not all creditors are handled the same way in a bankruptcy case. Instead, they are assigned to a priority class. Most consumer creditors won’t receive the full balance due on the account. Because of this, they can’t try to circumvent the court to collect. The automatic stay prevents creditors from having an unfair advantage over others involved in your case.
It’s imperative that anyone who’s filed for bankruptcy know what to do if they’re approached for payment. You can’t legally pay the debt. Instead, let them know that you filed for bankruptcy. You may have to give them your attorney’s contact information and tell them to contact the attorney.
Make sure that you let your lawyer know if a debt collector continues to try to collect on the debt even after you let them know that you filed bankruptcy. You may have legal options to handle those creditors. Learning your rights and what options you have can help you ensure you aren’t being taken advantage of when you file.
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