A little more good news in the most recent economic outlook from Wells Fargo: Wells Fargo March Economic Report.
Delaware Judges as Defendants?
March 7, 2012 by
A recent lawsuit brought in federal court is challenging the legality of non-public arbitrations conducted by Delaware Court of Chancery judges. The Delaware court system is a model in the corporate world, known for its efficiency and judges who are experienced in handling sophisticated corporate matters. Now, the Delaware court’s practice of holding private arbitrations in front of sitting judges is being questioned. In particular, the plaintiffs in the lawsuit argue that the private arbitrations violate the public’s constitutional right of access to judicial proceedings. The plaintiffs argue that there are no public records that detail the number of arbitrations, the subject of the arbitrations, or whether the court dedicates excessive resources to the private arbitrations.
Pitfalls in Securing Loans with Borrower Deposit Accounts
February 29, 2012 by
As the value of real property, fixtures and equipment has declined in the past few years, lenders have become even more diligent about over-collateralizing their loans. Security Agreements drafted by lenders often contain “blanket lien” provisions in which the lender takes a security interest in almost every item of real property, furniture, fixtures, equipment, inventory and bank accounts that the borrower may have. However, when the borrower’s deposit accounts serve as collateral for the loan, there are certain instances when a lender’s perfected security interest can be defeated. [Read more...]
Slow Economic Recovery Continues
February 22, 2012 by
Some good news from Wells Fargo in their recent Economic Outlook. The economy is slowly but surely continuing to improve: Wells Fargo February 2012 Economic Outlook.
Fiduciary Duties of Delaware LLC Managers
February 17, 2012 by
A recent opinion from the Delaware Court of Chancery is an important read for managers of Delaware LLCs and their counsel. In Auriga Capital Corp. et al v. Gatz Properties, LLC et al, C.A. 4390-CS (Del. Ch. Jan. 27, 2012) the court held that managers of Delaware LLCs owe fiduciary duties of care and loyalty to minority members unless those duties are expressly waived or amended in the Operating Agreement.
Fiduciary duties of LLC managers is an important matter, as many Operating Agreements are silent on the issue. Such silence will now result in fiduciary duties being imputed to the LLC manager(s). Although fiduciary duties will now apply to LLC managers, the court acknowledged that parties to the Operating Agreement are free to modify or eliminate such duties. Attorneys drafting Operating Agreements for Delaware LLCs should discuss with their clients the advantages and disadvantages of modifying or eliminating the fiduciary duties owed by the LLC manager(s). If the parties desire to completely eliminate such duties, the court advised specifically stating in the Operating Agreement that “The only duties owed by the Manager are set forth in the Agreement.”
Although the court’s ruling does not effect LLCs in other jurisdictions, other state courts often look to Delaware in corporate law matters, and may opt to follow Delaware’s lead.
Report on Housing Recovery and Homeownership
February 10, 2012 by
Wells Fargo has released its report on the housing recover, vacancy rates and homeownership: Wells Fargo Housing Report Jan 2012.
Common Employment Mistakes Made By New Companies
February 7, 2012 by
Preserving capital and reducing expenses are priorities for most startups. However, when it comes to compensating employees startups need to be careful of how they try to save money. Inadvertently running afoul of various employment laws can cause a startup to incur significant regulatory penalties, litigation expenses, and increased taxes.
The first employees of a company are generally the founders, or others with a significant personal interest in the company. To conserve capital, these individuals sometimes forgo salary or other cash compensation for the work they are performing, or make arrangements to receive equity or be paid at a later date. Unfortunately, arrangements of this nature often violate state wage and hour laws. In the event that a founder or early employee departs the company on bad terms, the startup could find itself the target of an investigation by state regulators and tax authorities. [Read more...]
Phoenix Foreclosures, Home Prices Both Decline
February 3, 2012 by
According to a study conducted by Arizona State University, Phoenix-area foreclosures declined 16% in 2011, but home prices declined substantially as well. There were 35,855 foreclosures in Phoenix, down from 41,625 in 2010. While that is welcome news, homeowners staying in their homes are continuing to see values decline. The median sales price for a single-family home dipped to $125,000 in 2011, down 10.4% from 2010. The median price for multi-family units also declined more than 10% from 2010.
Obama Announces Extension of HAMP
January 31, 2012 by
The Obama administration announced that it will extend the Home Affordable Modification Program for an additional year, and also increase payments to banks in an effort to get them to modify more troubled loans. HAMP was set to expire at the end of this year, but will now be extended until the end of 2013. HAMP’s original purpose was to enable borrower’s to reduce their monthly payments by extending the term of their loan and/or lowering the interest rate. Now, however, the focus is more on pushing banks to reduce outstanding loan balances.
When the Obama administration announced HAMP 3 years ago, it initially estimated that 3 to 4 million homeowners could receive assistance under the program. However, only about 750,000 homeowners have been able to permanently reduce their mortgage payments.
Arizona Non-Judicial Foreclosure Process (a/k/a Trustee’s Sale)
January 26, 2012 by
I recently posted some information for homeowners who are considering a short sale, deed-in-lieu or foreclosure as a way to get out of an underwater property. As I explained in my post, when it comes to foreclosure there can be different processes for foreclosing, either a “judicial foreclosure” or a “non-judicial foreclosure,” which is more commonly known as a “trustee’s sale.” Since judicial foreclosures are uncommon in Arizona, I am focusing this post on the process for non-judicial foreclosure (trustee’s sale). [Read more...]
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