Environmental Lawyer BLog

If you have a security interest in a partnership or LLC interest, you probably perfected that security interest by filing a UCC financing statement against the debtor. And if you were the first to file against most partnership or LLC interests, you had first priority upon filing. However, you would probably be shocked to find out that a party who subsequently obtains a security interest can jump your priority.

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California businesses with 20 or fewer employees should be aware that the state provides a $3,000 tax credit for each additional full-time employee hired during 2009. The credit applies to hourly wage employees averaging at least 35 hours per week and full-time (at least 40 hours per week) salaried employees. An employer will not qualify for the credit unless it has a net increase in full-time employees compared to its number of full-time employees for 2008.

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An interesting question recently arose for a client who happens to be a lawyer. The client wanted to form a professional law corporation and, for estate planning purposes, wanted his revocable trust to be the sole shareholder of the law corporation. The problem was that the applicable statute, Section 13406(a) of the California Professional Corporation Act, states that only an individual who is a licensed professional (a licensed attorney in our case) can hold shares in a professional corporation. Similarly, the California State Bar states that a law corporation's application for registration must show that each shareholder of the law corporation is a licensed attorney.

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Lenders will be surprised to learn that they may be liable for a borrower’s unpaid payroll tax obligations. Lenders supplying funds to borrowers for the specific purpose of paying wages, with knowledge that the borrower will not be able to meet its payroll tax obligations, may be personally liable for such unpaid taxes. This liability can extend to lenders who have no knowledge of a borrower’s inability to meet payroll tax obligations if the lender could have found out by exercising due diligence.

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Seemingly every day, the news is filled with another story about a bankruptcy filing, or a development in a major bankruptcy case. Just in the last 4 months of 2008, companies such as Lehman Brothers and Tribune Company have filed Chapter 11 bankruptcies. Not to mention Merrill Lynch and AIG, each of which presumably would have filed but for government bailouts. The jury is still out for the Big 3 auto makers but the only question appears to be whether there will be bankruptcies or a large loan from taxpayers.

In addition, retailers, manufacturers, and service companies of all shapes and sizes have entered Chapter 11. The ripple effect leads to more filings. Other notable bankruptcies filed during the past 6 months include:

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