Where two or more friends, family members, or other individuals come together to form a closely-held business entity, to start a new business or some other purpose, the parties should execute a binding legal agreement amongst themselves and the company to address a variety of issues relating to the ownership and control of the company. The agreement should be discussed and executed when commencing the business relationship, because many individuals tend to overlook or downplay the real possibility of potential conflicts and problems that may arise in the future. Also, due to their low number, shareholders in closely-held business arrangements often assume management and direction of the company an agreement will make known who controls and manages the business.
As a Director or Officer of a business certain actions that are undertaken can be illegal, unauthorized, or damaging to the business. Although the corporate veil normally protects the business form personal liability, Directors and Officers may still be open to liability. Directors and Officers (or D & O) liability insurance is different from general liability or business owners insurance because it provides financial protection for an individual or individuals. It usually does not cover penalties, punitive damages, fines or claims made on a criminal basis. In today’s world, business owners may want to consider directors and officers liability as a part of their overall insurance program. It provides coverage for directors and officers of an organization in the event they are sued in conjunction with the performance of their duties as they relate to the organization. As your business grows and your assets increase in value our experienced attorneys can help you evaluate your options and polices to make sure you are protected.
Under the New Jersey Franchise Practices Act (NJSA 56:10-1)(“NJFPA”) sets forth a number of legislated rights designed to benefit franchisees. Both franchisors and franchisees with operations in the state of New Jersey should be aware of the NJFPA and its legislated rights, including NJFPA’s extremely vague “prohibition” against “unreasonable standards of performance”. Franchisor Standards of Performance must be “Reasonable”. Under the NJFPA franchisors are prohibited from imposing “unreasonable standards of performance on franchisees”. This extremely vague “prohibition” is open to a broad range of interpretation and is designed, among other things, to prevent the termination of franchisee rights under the pre-text of “non-compliance”. We will review franchise documents, explain your standards of performance and advise you throughout the process of purchasing or selling a franchise.
If you are buying or selling a business such as a franchise, restaurant, convenience store, there are a number of legalities that should and can be discussed with one of our attorneys. If you are buying or selling a business in New Jersey review of:
- Business lease agreements;
- Trademark and intellectual property license agreements;
- Shareholder and partnership agreements;
- Franchise purchase transactions;
- Establishment of franchise system (FDD) disclosure documents; and
- Franchise registration.
Are all things to be considered. In addition to the normal business acquisition issues, we make sure that all of the franchise agreements are assigned. We also ensure that all post-closing liabilities and assets of the business, including obligations to franchisees, are transferred to the new owner. We will provide you with our legal expertise in buying and/or selling franchised businesses.
A well authored operating agreement is so important but very often overlooked when forming an LLC in New Jersey. Often times entrepreneurs register their businesses and don’t follow up with and operating agreement. Getting the Business Certificate of Registration does not automatically form how your business will operated nor does it provide for contingencies. Under what circumstances can a member may assign his or her interest in the LLC? Some issues to consider include, without limitation: 1) whether a member can assign his or her interest prior to the dissolution and winding up of the LLC; 2) whether an assignment requires member and/or manager approval; 3) whether the assigning member must sell his or her interest to the remaining members and/or the LLC or offer them a right of first refusal; 4) regardless of the restrictions placed on assignment, whether a member can assign his or her interest to relatives during life and/or upon death; and 5) the rights of an assignee including, without limitation, whether an assignment of a member’s interest entitles the assignee to any rights of a member, other than economic rights. Under the default rules of the act, a member may assign his or her interest in the LLC, in whole or in part. However, upon assignment, an assignee only receives the economic benefits of membership, such as the right to receive distributions and share in the profits and losses of the LLC. The assignee does not, for instance, receive any voting rights previously held by the assigning member. These are all considerations that can be discussed with one our attorneys today.
Opening shop is very exciting! However the first deal may not be the best and the terms of the lease may not be the best either. One of our Ocean County attorneys can help review the commercial lease. Some common mistakes that we see are people, Accepting the Terms of a Standard Lease, Assuming the Landlord’s Proposed Lease Is Fair, Failing to Understand Your Negotiating Position, Overlooking Market Research and Signing a Lease Without Understanding Its Terms. Most leases are full of legalese that can make the untrained eyes glaze over. Therefore it is important to have a an attorney read its entirety and understand what each provision means and advise you of such. For instance, what happens if the landlord’s lender forecloses? Or what happens if you need to terminate the lease? It is far more likely that the landlord’s attorney has crafted a lease that favors the landlord in terms of the rights and obligations of each party. Therefore, it is imperative for you to negotiate a lease that also has your best interest in mind.
When the United States Trustee’s office sends a referral to the United States Attorney’s office, what does the referral package consist of? In a typical case, the referral package consists of a letter addressed to the United States Attorney or the Fraud Coordinator which embodies a basic explanation of who the debtor is, the facts comprising the potential federal crime(s), why the conduct falls under one of the criminal bankruptcy provisions (18 U.S.C. §§ 151-57), and a summary as to why the facts justify investigation and prosecution. Sometimes, the referral package includes forensic evidence, such as writing samples.
If your case has been referred to the United States Attorney’s Office this means that they are reviewing the case for possible criminal prosecution. The professionals in their staff include: lawyers, accountants, and analysts. These professionals examine bankruptcy documents and testimony to determine whether, among other things, the law is being followed by all parties. They also develop information concerning abuse of the bankruptcy laws (which would warrant civil proceedings) or fraudulent or criminal conduct.
If you are accused or being investigated for bankruptcy fraud, our experienced legal team of Bankruptcy Fraud Defense Attorneys in Trenton is ready to help. Call us ASAP to review your case with us. Bankruptcy fraud cases involving sections 152 and 157 of Title 18 delineate common bankruptcy crimes. Both sections require the government to prove intent. Under 11 U.S.C. § 152, the government must establish that the defendant acted “knowingly and fraudulently.” Similarly, the government must show specific intent to defraud under 18 U.S.C. § 157.
Fraud can arise when you misrepresent the facts during the preparation of bankruptcy documents such as petition, schedules, and statements; all of which are submitted under penalty of perjury. Other scenarios where bankruptcy fraud occurs is during the meeting of creditors where the debtor, placed under oath, testifies regarding their financial situation.
The United States Trustees Office has a variety of methods to investigate debtors for possible fraud. They can examine the documents you submitted or even compel an oral examination. Debtor’s affairs are carefully investigated by trustees or creditors’ committees who have broad authority to conduct such investigations.
Federal Bankruptcy Rule 2004 provides that the Bankruptcy Court may order the examination of any entity or person. With Rule 2004 examinations, and adversary proceedings, the USTs can help AUSAs by identifying conflicting and false statements made under oath. If a Rule 2004 examination is ordered by Court and debtors fail to appear or submit documents, sanctions will follow.
If you or someone you know is the subjection of an investigation during a bankruptcy process, you must not take it lightly. For if fraud is found, you may face criminal charges. Riviere Advocacy Group LLC works with our own team of experts and investigators, to counter the government’s investigation, and build your best possible defense.
Criminal statutes that apply to bankruptcy fraud are 18 U.S.C. Section 152 that specifically prohibits knowingly and fraudulently (1) concealing property of the estate; (2) making a false oath or account; (3) making a false declaration, verification or statement under penalty of perjury; (4) presenting or using a false proof of claim against a debtor estate; (5) receiving, post-petition, a material amount of property from a debtor with intent to defeat the provisions of the Bankruptcy Code; (6) offering, receiving, or attempting to obtain consideration for acting or refraining from acting in a case under the Bankruptcy Code; (7) transferring or concealing property in contemplation of a bankruptcy case or with intent to defeat the provisions of the Bankruptcy Code; (8) post-petition concealment or alteration of records; and (9) post-petition withholding of a debtor’s records.
The statute applies to anyone who commits any of the above including debtors, creditors, fiduciaries and anyone else.
Section 153 of Title 18 makes it a crime for anyone to appropriate to their own use, embezzle, spend, or transfer any property belonging to a debtor’s estate, and any actions of the same ”persons” if they secret or destroy any document belonging to a debtor’s estate.
Section 155 of title 18 prohibits knowing and fraudulent agreements that are aimed at fixing compensation in bankruptcy cases.
Section 157 of Title 18 is actually entitled ”Bankruptcy Fraud” prohibits a person from (1) filing a bankruptcy petition; (2) filing a document in a bankruptcy case or proceeding; or (3) making a false or fraudulent representation, claim, or promise concerning or in relation to a prepetition or pending bankruptcy case or proceeding (or a proceeding falsely asserted to be pending) if these acts are done as part of the scheme to defraud.
Other bankruptcy fraud criminal charges may include tampering with or falsifying records (18 U.S.C. Section 1519)