Common Reasons the California Secretary of State Rejects Corporate Filings (Part One – Mergers)

Common Reasons the California Secretary of State Rejects Corporate Filings (Part One – Mergers)

Every year, numerous corporate filings are rejected by the California Secretary of State. This is the first in a four-part series, and examines a few of the most common reasons that filings for mergers are rejected.

The successful timing of a merger filing can be crucial in a merger transaction; the effectiveness of the merger filing often triggers other transactions contemplated by the merger agreement. The most common reasons for rejection of a merger filing vary depending on the nature of the entities being merged, as follows:

1. Merger of corporations

A. Including only one, rather than both, of the required officer signatures on the merger agreement: For each corporation involved in the merger, the merger agreement must be executed and acknowledged by (i) the chairperson of the board, president, or a vice president, and (ii) the secretary or an assistant secretary of the corporation. (California Corporations Code (“CCC”) § 1102).

B. Including the corporation’s name on, above, or near the officer signature blocks on the officers’ certificate: When a corporation effects a merger by filing a copy of the agreement of merger, the filing must include officers’ certificates for the surviving corporation and each merging entity. (CCC § 1103). Each such officers’ certificate must be signed by (i) the chairperson of the board, president, or a vice president, and (ii) the secretary, chief financial officer, treasurer or any assistant secretary or assistant treasurer of the corporation. (CCC § 173). Both officers must sign in their individual capacities and not on behalf of the corporation. If the corporation’s name appears on, above, or near an officer’s signature block in such a way that the officer appears to be signing on behalf of the corporation, rather than in his or her individual capacity, the officers’ certificate and the merger filing may be rejected.

C. Submitting a file-stamped, rather than certified, copy of the merger document when the surviving corporation is a foreign corporation: If a foreign corporation will be the surviving corporation in a merger with a California corporation, there are three alternative methods for completing the merger filing in California: (CCC § 1108(d)).

1. Submit a certified copy of the merger document filed in the foreign jurisdiction (e.g., a certificate of merger certified by the Delaware Secretary of State);

2. Submit merger documents meeting the requirements of California law, including a copy of the agreement of merger and officers’ certificates for the surviving foreign corporation and each domestic merging corporation, or, if appropriate, a certificate of ownership; or

3. Submit an executed counterpart of the merger document filed in the foreign jurisdiction (in the form required by the laws of the foreign jurisdiction); the submitter must also provide proof that the merger document has been filed in the foreign jurisdiction.

Importantly, for the first option listed above, the copy of the merger document must be certified, by the public official having custody over the original filed document. The filing will be rejected if the filer merely submits a file-stamped, and not certified, copy of the merger document.

D. Failing to clearly identify the consideration being paid in the agreement of merger: The agreement of merger filed with the California Secretary of State must clearly set forth the manner of converting the shares of each constituent corporation into shares, interests, or other securities of the surviving party. If any shares of any constituent corporation will not be converted solely into shares, interests, or other securities of the surviving party, the agreement of merger must specify (i) the cash, rights, securities, or other property which the holders of those shares are to receive in exchange for their shares (whether in addition to or in lieu of shares, interests, or other securities of the surviving party), or (ii) that the shares will be cancelled without consideration. (CCC § 1101(d)).

E. Having an insufficient number of authorized shares to consummate the merger: The surviving corporation must have enough authorized, but not yet issued or outstanding, shares to accommodate any new shares to be issued in consideration for the merger.

1. Merger of a corporation with any other business entity

A. Submitting a certificate of merger without the required attachments: The certificate of merger must be accompanied by both (i) a copy of the agreement of merger and (ii) officers’ certificates for the surviving corporation and for each merging entity. (CCC §§ 1113(g)(1) and 1113(j)(4)). The California Secretary of State has posted a sample agreement of merger and a sample officers’ certificate on its website, which samples have been designed to meet minimum statutory requirements in a situation when there is only one class of shares and 100% shareholder approval is received. The exception is if only a disappearing corporation is merged into a California other business entity, the certificate of merger is the sole document required to be filed. (CCC § 1113(g)(2)).

B. Filling out inapplicable items in the certificate of merger: If the filer has filled out items on the certificate that are not applicable to the merger, the filing may be rejected. For example, if the merger does not involve the issuance of equity securities of a parent party, the filer should not check either of the boxes in Item 10 of the certificate of merger.

C. If the merger involves a foreign entity, failing to identify the foreign law authorizing the merger: When the merger involves a foreign entity, the certificate of merger must set forth in Item 14 the statutory authority or other basis under which the foreign entity is authorized by law to effect the merger (e.g., for a Delaware merger of corporations, Delaware General Corporation Law § 252). (CCC § 1113(g)).

D. Failing to include the proper signatories: The certificate of merger must be executed and acknowledged by both (i) the surviving entity and (ii) each other merging business entity. The California Secretary of State has prepared a table, available on its website, which summarizes the specific signatory requirements for each constituent entity. (CCC §§ 1113(g)(1) – (2), 3203(g)(1) – (2), 6019.1(f), 8019.1(g), 12540.1(g), 15911.14(a), 16915(b) or 17710.14(a)).

Ranked as being one of the "Top Lawyers In California" 2015

Again, Ranked as being one of the "Top Lawyers In California"

Attorney Daniel H. Alexander has received recognition once again in the 2015 edition of The Legal Network as being one of the "Top Lawyers In California" with the "Highest in Ethical Standards & Professional Excellence"

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Attorney Daniel H. Alexander receives Client Distinction Honor for 2015

Attorney Daniel H. Alexander has been selected by Martindale-Hubble / Lawyers.com for a Client Distinction Honor for 2015. This is recognition for Excellence in Quality of Service, Overall Value, Responsiveness and Communication Ability.

Out of more than 900,000 attorneys across the country, less than 1% received this prestigious designation. Considering that over 99% of the other attorneys did not make this cut, that places Daniel H. Alexander in an extremely rare and special group, indeed.

Estate Tax and Estate / Trust Income Tax update for 2015

The IRS released Rev. Proc. 2014-61, which contains the 2015 adjustments for the federal estate tax, gift tax, and generation-skipping transfer tax exemptions as well as the 2015 annual gift tax exclusions:

1) The estate tax exemption will increase from $5,340,000 in 2014 to $5,430,000 in 2015 The top estate tax rate will be 40%. The lifetime gift tax exemption and generation-skipping transfer tax exemptions are the same with the same top rate.

2) The annual gift tax exclusion will remain at $14,000 in 2015.

3) The annual gift tax exclusion for gifts to noncitizen spouses will increase to $147,000 in 2015.

In addition, Rev. Proc. 2014-61 provides that estates and trusts will be subject to the following income tax brackets in 2015:

1) If the income is not over $2,500.00, the tax rate is 15%.

2) If the taxable income is over $2,500 but not over $5,900, then the tax is $375 plus 25% of the excess over $2,500.

3) If the taxable income is over $5,900 but not over $9,050, then that tax is $1,225 plus 28% of the excess over $,5900.

4) If the taxable income is over $9,050 but not over $12,300, then the tax is $2,107 plus 33% of the excess over $9,050.

5) If the taxable income is over $12,300, then the tax is $3,179.50 plus 39.6% of the excess over $12,300.

Daniel H. Alexander, Attorney www.dalexander.com

Estate Taxes are not the same in all 50 States

In California we do not have a State Estate Tax, so we usually only have to worry about and plan for the Federal Estate tax exemption.

However, I have many clients that own property in multiple states and many times this can cause a problematic estate tax situation, especially if they later move to a State with a additional State Estate Tax.

For example, Oregon can be a real problem. They have a State Estate Tax and they apply the tax to people who have property in Oregon whether or not you are a resident there and they calculate the tax based on all property owned anywhere; inside or outside Oregon. If you own property or an asset in Oregon you should talk to an Oregon attorney or accountant about this.

So that you know, the federal estate tax exemption of $5 million per person, indexed for inflation, for 2015, will be $5.43 million, up from $5.34 million in 2014. This means up to $5.43 million of an individual’s estate will be exempt from federal estate tax, with a 40% tax rate applied to any excess over the exemption amount. By contrast, states with estate taxes typically exempt far less per estate from their tax and impose a top rate of 16%. As in the federal system, bequests to a spouse are tax-free.

States that have made Estate Tax changes include New York and Maryland who made the most significant changes for 2015. The Maryland legislature's new law increases the amount exempt from the state estate tax from $1 million this year, to $1.5 million in 2015, $2 million in 2016, $3 million in 2017, and $4 million in 2018. Finally, in 2019 it will match the federal exemption which is projected to be $5.9 million.

In Maryland, spouses, children (and their spouses and children), parents, and siblings are all exempt from the state inheritance tax, but a niece or aunt or friend, for example, would owe the inheritance tax at a rate of 10%.

Maryland and New Jersey are the only two states that have an inheritance tax in addition to an estate tax.

New York’s changes included doubling the states exemption amount from $1 million for deaths before April 1, 2014 to $2,062,500 for deaths from April 1, 2014 through April 1, 2015. The New York exemption is set to rise gradually through 2019 to eventually match the federal exemption. By April 1, 2017 the New York exemption will be $5,250,000.

However, a so called cliff is one problem with the New York law. If a resident’s taxable estate exceeds the basic exemption amount by more than 5%, the entire taxable estate will be subject to the state estate tax.

Other states where the exemption amounts are going up include Tennessee, Minnesota and Rhode Island.

Other states indexing their exemptions for inflation are Washington, with a base exemption of $2 million, and Hawaii and Delaware, which both match the federal exemption amount.

In New Jersey thee has been a bill introduced to eliminate the state’s estate and inheritance tax. New Jersey has the lowest state estate exemption amount at $675,000.

Several sates have repealed their State Estate ax I recent years, including North Carolina and Indiana in 2013 and Kansas, Ohio, Oklahoma in 2010.

www.dalexander.com

Taking care of our Veteran's Long-Term Care Needs

Veterans and their surviving spouses as they grow older will usually need long-term care. The Veterans Administration has programs to help pay for this type of care but unfortunately many are not aware that these benefits exist.

The following types of benefits are available and the veteran and surviving spouse does not need to have service-related injuries, but must meet certain eligibility requirements for wartime service, age and/or disability, and income/assets.

The first is: Pension with Aid and Attendance.

This offers the highest possible monthly payment and provides benefits for a veteran or surviving spouse who requires the attendance of another person to assist in activities of daily living, is blind, or is a patient in a nursing home. Assisted care in an assisted living facility also qualifies. This benefit can provide up to approximately $1,704 per month to a veteran, $1,094 to a surviving spouse, or $2,020 to a couple. An independent and well veteran who has an ill spouse with medical expenses that deplete their combined monthly income can receive up to $1,338 per month. A physician’s statement that verifies the claimant’s condition and need for assistance is required.

The second is: Pension with Housebound Allowance.

This has lower benefit, but will help those who do not qualify for Aid and Attendance, and who wish to remain in either their own home or the home of a family member. This benefit requires that the individual needs regular assistance with lesser of a criteria as for those who would qualify for Aid and Attendance. Care can be provided by family members or outside caregiver agencies. A physician’s statement documenting the claimant’s medical needs is required.

The third is Basic Pension

This is for veterans and surviving spouses who are age 65 or older or are disabled, and who have limited income and assets. No physician’s statement documenting a medical need is required.

To Qualify for these benefits a veteran must first meet certain criteria, such as wartime service, 65 or older, or be permanently and totally disabled, and certain income and asset requirements must be met.

Many times the asset level requirement is difficult to meet. When determining eligibility, the VA looks at a claimant’s total net worth, life expectancy, income and medical expenses. A married veteran and spouse should have no more than $80,000 in “countable assets,” which includes retirement assets but does not include a home and vehicle.

Income for VA Purposes (called IVAP) must be less than the benefit for which the claimant is applying. IVAP is calculated by subtracting countable medical expenses from the claimant’s gross income from all sources. Countable medical expenses are recurring out-of-pocket medical expenses that can be expected to continue through the claimant’s lifetime.

It often takes the VA more than a year to make a decision, but once approved, benefits are paid retroactively to the month after the application is submitted. Processing time can be greatly reduced by having the proper documentation (discharge papers, medical evidence, proof of medical expenses, death certificate, marriage certificate and a properly completed application) at the time of application.

Because time is critical for these aging veterans and their surviving spouses, application should be made as soon as possible. And while it is possible to do this without legal assistance, an Elder Law attorney who has experience with securing VA benefits will undoubtedly be able to help the process go as smoothly and quickly as possible.

Example of a “DIY” will that failed in Court

I previously posted on DIY Estate Planning. Here is a real life example from earlier in 2014.

Case name: Aldrich v. Basile

Ms. Aldrich twice tried to create a do-it-yourself will, and failed both times. In the first attempt, she used a pre-printed form to fill in details on disposition of her assets, but she failed to indicate who would inherit the residue of her estate, Then, after her primary beneficiary died, she handwrote a codicil (basically an amendment to a will) to confirm her intent that her assets were to go to her brother. However, she failed to comply with the formalities needed to make the codicil valid under state law.

After Ms. Aldrich’s death, her brother Mr. Aldrich, was appointed as personal representative of her estate and he sought to have a court determine who would inherit the property.

Laurie Basile and Leanne Krajewski, Ms. Aldrich's nieces from a predeceased brother, asserted an interest in the probate action. Mr. Aldrich initiated an adversary proceeding in the probate case and argued that the most reasonable and appropriate construction of the will was that Ms. Aldrich intended for her entire estate, including what she had acquired from her sister, to pass to him.

Her nieces, however, argued there wasn’t a valid will and therefore by law they should receive the residue of the estate. The dispute went all the way to the State Supreme Court, where the court found for the nieces. Even though the facts suggest Ms. Aldrich intended for her brother to be her beneficiary, the court determined she failure to state this intent in a compliant legal document.

The key here is a compliant legal document, i.e. one that complies with and is valid under the law.

Daniel H. Alexander, Attorney
www.dalexander.com / (800) 530-4529

DIY Business Planning gone wrong

Here is a court case example: Case Name: Selzer v. Dunn

Life insurance is often used to buy out a deceased owners share in a business so the family is compensated and so the other owner(s) do not have to be partnered with the deceased owner’s family. However DIY business planning in this regard can be disastrous.

In this case two co-business owners purchased a $2,000,000.00 life insurance policies on each other’s lives. It appears to most that the original intent was to have the life insurance fund the purchase of the decedent’s shares at his death. When one of the business owners died, the proceeds were paid to the surviving shareholder.

The family of the deceased owner wanted the surviving owner to turn over the insurance proceeds in return for the stock, but the owner refused. The court concluded that the surviving owner was not required to use the life insurance proceeds for the purpose of purchasing the decedent’s stock. It determined there was neither an oral agreement nor an implied trust.

It is interesting to note that an attorney had prepared three drafts of a buy and sell agreement for the owners, but they never signed them. Even though the owners obtained life insurance to fund a sale, the sale failed for lack of a binding buy-sell agreement.

DIY Estate Planning - “penny-wise and pound-foolish”

Some penny-pinching tips make sense, while there are others that may sound like a good idea but can actually cause a great deal of harm.

Do it yourself (DIY) estate planning is one of those ideas that may appear promising, but in reality is a recipe for disaster. It is like the old adage “penny-wise and pound-foolish.”

First of all the laws change every few years. So how do you know you are getting a relevant document? For example, I have come across many Health Care Powers of Attorney documents that were old or obtained from the “stationary store” or the internet that were frankly devoid of relevant law and in most cases were no longer valid because they expired after 7 years (the old statutory language stated they expired after 7 years).

In other instances DIY Will(s) were not properly drafted, signed or witnessed and therefore unenforceable causing a long draw out legal battle.

DIY Trusts, on the other hand, I usually find have too much unnecessary language because the original drafter threw in the kitchen sink. They are usually an A-B Trust or QTIP Trust when one is not needed. So instead of everything going to the surviving spouse with ease, only half goes to the surviving spouse out right. The other half remains in an irrevocable trust that the surviving spouse can’t access or change, causing heart ache and costing money.

To provide you peace of mind and to ensure that your wishes will be met, and to save your family from the stress and cost of probate litigation, call our office and talk with an Estate Planning attorney. We won’t bite.

Daniel H. Alexander, Attorney www.dalexander.com / (800) 530-4529

New SEC Rules for 2014

The Securities and Exchange Commission (SEC) has announced that it will hold an Open Meeting on Wednesday, December 18, 2013 at 10:00a.m. (EST) to consider whether to proposed rules and forms related to the offer and sale of securities pursuant to Section 3(b) of the Securities Act of 1933, as mandated by Title IV of the Jumpstart Our Business Startups Act (JOBS Act). The notice can be found here:http://www.sec.gov/news/openmeetings/2013/ssamtg121813.htm.

Title IV creates a new federal securities exemption for certain public offerings in an amount of up to $50 million. This new exemption is commonly known as “Regulation A+” because it is based upon Regulation A, which already exists but is rarely used. Regulation A provides an exemption for the public offer or sale of securities in an amount up to $5 million per year for US or Canadian entities that meet certain conditions.

Following the meeting, a Webcast Archive can be found on the SEC’s website by clicking here:http://www.sec.gov/news/openmeetings.shtml

New 2014 California LLC Rules May Impact You

New 2014 California LLC Rules May Impact You

Effective January 1, 2014, if you conduct business through a California limited liability company(“LLC”), the LLC will be subject to a new set of laws called the California Revised Uniform
Limited Liability Company Act, or RULLCA.

This new law will completely replace current law and will apply to all LLCs formed in California, including those formed prior to January 1, 2014.

While much of the new law is similar to current law, significant changes include:

• Clarifying fiduciary duties and identifying when those duties may be altered or eliminated in an operating agreement;

• Defining conditions for dissociation of a member from an LLC, including when a member may withdraw from an LLC and the resulting impact on the member and the LLC;

• Enacting new provisions governing LLC capitalization;

• Changing the priority between the operating agreement and the LLC’s articles of organization when a conflict exists between the documents;

• Establishing limitations and restrictions with regard to the indemnification of members and managers from liability for money damages arising from a breach of duty; and

• Providing a more detailed set of default rules that will go into effect when an operating agreement is silent.

What Should You Do?

To avoid unwanted consequences, the operating agreements of existing California LLCs should be reviewed as soon as practicable and, ideally, before January 2014, to identify any provisions that may (i) not be in compliance with the new law; (ii) need to be clarified or changed to eliminate ambiguity as a result of the new law taking effect; or(iii) raise issues wherein alternatives to the new law should be considered.

Further, any inconsistencies between the operating agreement and the LLC’s articles of organization should be assessed and resolved.

Give our office a call if you have any questions or concerns regarding your LLC.

Law Offices of Daniel H. Alexander, PLC / www.dalexander.com / (800) 530-4529

Advantages of Incorporating (Series #3 out of 7) - Tax Savings

Advantages of Incorporating (Series #3 out of 7)- Tax Savings.

When you incorporate there are numerous tax advantages at your disposal that are virtually impossible to accomplish with other business entities. By incorporating you create a separate and distinct legal entity.

Because of this, there are many transactions that you can structure between you and your corporation to save big money on taxes. For instance, if you own a building, you can rent office facilities to your corporation and claim depreciation and other deductions for it and your corporation can then claim the rental expense. Not with a sole proprietor or a partner in a partnership.

Also, after paying yourself a reasonable salary, your corporation can then pay dividends to you, which is taxed at a capital gains rate (approximately 15%). Compared to the self employment tax and regular income tax that a sole proprietor or a partner in a partnership pays which is usually 30% to 40%. Therefore, in the above example, the corporation saved the shareholder at least 15% in taxes.

These are just a few example. Give Attorney Daniel Alexander a call at (800) 530-4529 or check out our webpage at www.dalexander.com for additional information

Does the "due on sale" clause in a Mortgage apply to a transfer to a relative from a trust or through Probate?

I have heard a lot of misinformation regarding the treatment of mortgages at the death of a loved one. Some people think they will have to qualify for the loan in order to keep the mortgage and house, or that there is a "due on death" clause and the mortgage is due at the death of the loved one, or that the "due on sale" clause applies in this situation.

All the above are false.

There are several exceptions to the "due on sale" clause which can be found in The Garn St. Germain Depository Institutions Act of 1982, (U.S.C.) 1701j-3(d)(8).

The term “due-on-sale clause” means a contract provision which authorizes a lender, at its option, to declare due and payable sums secured by the lender’s security instrument if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender’s prior written consent.

Some people call this an acceleration clause where the loan is accelerated and becomes due immediately.

One exception in the Garn St. Germain Act is that the "due on sale" clause will not apply to: a transfer to a relative resulting from the death of a borrower.

(e.g. – a transfer from a trust or in probate to a relative, such as a spouse or child)

So this means that the mortgage company cannot call the loan, cannot start foreclosure, etc. just because the property is being transferred to a relative in a trust or probate process.

You as the relative receiving the property can either continue to keep making the required payments or you can ask the bank to add you on to the loan / assume the loan and then continue to make payments.

Now this does not mean you do not have to pay the mortgage payment. Of course you have to make the mortgage payment. If you don't then they can foreclose on the property.

Remember, be sure to get good advice from a attorney that practices Estate Planning and Probate!

For more information contact Attorney Daniel H. Alexander at (800) 530-4529 or review other articles on our website - www.dalexander.com

This does not constitute legal advice. Talk to an attorney in person or on the phone.

Advantages of Incorporating (Series #2 out of 7) - Easier to Sell / Transfer

Advantages of Incorporating (Series #2 out of 7)

2.- Easier to Transfer / Sell. Corporations are generally much easier to transfer / sell and are usually more attractive to buyers than either a sole proprietorship or partnership.

One of the reason for this is because a new buyer will not be personally liable for any wrongdoings on the part of the previous owners. The liability stops with the corporation if the corporation is properly set up and run.

If someone buys a sole proprietorship, for example, the new owner can be held personally liable for any mistakes or illegalities on the part of the prior owner…even if the new owner had NOTHING to do with the situation! This is usually NOT the case with a corporation.

Further, many corporation owners (shareholders)do Estate Tax planning and succession planning through corporations buy gifting shares to children, or giving children or key employees stock as an incentive to continue with the business.

The transfer or sale of a corporation involves the transfer or sale of stock and generally does not require re-titling of assest, contracts, etc. that are in the corporations name. With sole proprietorships it is much more difficult since all assets of a sole proprietorship are in the owners name.

For more information give our office a call at (800) 530-4529, or check out further information on our website - www.dalexander.com

Advantages of Incorporating (Series #1 out of 7)

Advantages of Incorporating (Series #1 out of 7)

#1.- Asset Protection. If you operate as a sole proprietor or partnership, there is virtually unlimited personal liability for business debts or lawsuits.

In other words should you go out of business or be a defendant in a lawsuit, your personal assets such as homes, investments, bank accounts, vehicles, etc. are up for grabs by the creditor's of the company.

This is generally NOT the case when you incorporate. When you incorporate you are only responsible for your investment in the corporation or another way of saying it, they can only get what the corporation owns. The limited liability feature of a corporation, while not a guarantee, is DEFINITELY one of the most attractive reasons for incorporating.

For those of you that have already incorporated, be aware that many lenders require you to personally guarantee a loan. By doing this you are basically taking the liability outside the corporation and the Corporation and you personally are liable for the debt. Obviously try to avoid signing personal guarantees.

There are also a few things a business owner can do to limit the reach of a personal guaranty. Here are some ideas:

a. Have Multiple Options

When looking to borrow, have multiple options. Some banks and other financial institutions, and some trade creditors, may be willing to limit the reach of a personal guaranty when competing for your business.

b. Limit the Exposure by Spreading Amongst Business Partners

You may want to ask the lender to limit your exposure under a personal guaranty to your percentage interest in the company. So, for example, if you have three owners and you each own 33.33% interest in the company, ask your lender to limit your liability under a personal guaranty to one-third of any claimed amount. Some lenders will accommodate such a request.

c. Spouse as Business Partner

Consider whether you want to include your spouse as a co-owner of your business. Banks and other lenders typically want all those with an ownership interest in the business to sign a personal guaranty when the business takes out a loan. (Some banks will waive the personal guaranty requirement if the business partner owns 20% or less in the company.) While there are many factors to consider, limiting a spouse’s exposure to business debts is an important goal.

d. Limit the Length of the Personal Guaranty

If you will be reducing the amount of the loan over time, you may want to ask your lender to consider limiting the personal guaranty to the first two or three years of the loan with the thought that your real estate or other assets which secure the loan will, at that point, provide adequate protection for repayment to the lender.

e. Avoid Self Renewing or Blanket Personal Guarantees

Often, when working with suppliers, a business owner may sign a personal guaranty at the start of the relationship without realizing that this personal guaranty will continue indefinitely or renew automatically. I recently reviewed a 12 year old guaranty which a trade creditor was asserting as a basis for personal liability. You may want to put a sunset date on a personal guaranty or negotiate with the trade creditor to eliminate or limit the reach of the personal guaranty after you have established yourself as a reliable borrower.

Personal guarantees are a reality with doing business. However, if presented with a guaranty, attempt to limit its scope and impact by requesting reasonable limitations.

Verdict Update 7-16-13 - $478,919,765.00

Decision: $478,919,765.00

Yes, you read that number correctly. Infomercial producers were found liable to the Federal Trade Commission for engaging in deceptive acts and practices by falsely advertising their product and services to consumers (Federal Trade Commission v. John Beck Amazing Profits LLC, Central District Federal Court, Plaintiff’s attorney:, Willard K. Tom). The award was calculated from the earnings received by the defendant for their deceptive infomercials.

These were the get rich quick with real estate infomercials and coaching services as well as other gizmos such as an electric ab machine. Who thought they would get great abs in 20 days anyway? Just asking.

This is a decision against against all defendants namely: John Beck Amazing Profits, LLC, John Alexander, LLC, Jeff Paul, LLC, also d/b/a Shortcuts to Millions, LLC, Mentoring of America, LLC, Family Products, LLC, Douglas Gravink, Gary Hewitt, John Beck, John Alexander, and Jeff Paul.

Celebrity Law Update 7-12-13 - Shakira's ex boyfriend blocked from her accounts

Shakira’s ex boyfriend has been blocked from accessing her bank accounts by a court in Geneva. In a legal battle between Antonio de la Rua (her ex-boyfriend) and Shakira being played in a courtroom, this happens to be the latest turn. Antonio and Shakira have lawsuits against each other in Europe, the Bahamas, Los Angeles, and New York. Sounds like Celeb Lawyers dream client. Apparently this last one is also over intellectual property.

Antonio claims that he was instrumental in developing Shakira’s image and personal brand during their decade-long relationship. He claimed ownership rights to Shakira’s Swiss bank account which holds a majority of the assets he claims resulted from their alleged verbal agreement(s). Now there will be less money in those accounts for sure.

Verdict Update 7-10-13

Verdict: $3,050,000

Plaintiff, Elite, alleged that one of the defendants, Hamilton, secretly began operating a competing business under the name Summa after resigning as an employee, but while still an officer and director of Elite (Elite of Los Angeles Inc. v. Summa Consulting LLC)

Both are standardized test preparation and tutoring companies.

The jury found that Hamilton breached his fiduciary duty and duty to loyalty, engaged in wrongful conduct with the intent of disrupti

Verdict Update 7-2-13

Settlement: $7,500,000

Disembarked passenger struck by bus crossing the street causing degloving, mangling, on-scene amputation, further amputation and a lifetime of 24-hour care. (Nguyen v. Sacramento Regional Transit District, Sacramento County Superior Court

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