Corporate & Commercial

Unfortunately, the fluid situation regarding the COVID-19 epidemic has left many, including congress, reacting at a pace that may have been too slow to impact the spending of the PPP funds some businesses received prior to this latest amendment to the PPP loan program. There are likely quite a few employers that have met the 8-week requirement and spent their funds who will now not have the ability to take advantage of these extensions. Congress has now passed reforms headed to the executive for signature. The Bill: Extends the eight-week period for spending to 24 weeks or the end of…
Directors of a corporation owe fiduciary duties to the shareholders of the company. This means that when directors communicate with shareholders about the company, they have a fiduciary duty to exercise due care, good faith and loyalty. Directors can be held personally liable if they intentionally or recklessly mislead shareholders about the business or condition of the corporation. A Delaware Chancery Court recently dismissed a suit filed against the directors of GoPro, Inc. by a group of disgruntled shareholders who alleged that the directors misled them by issuing overly optimistic revenue guidance that the company was unable to live up…
“Justifiable Reliance” Under Section 523 of the Bankruptcy Code Collateral Base Attorney Tom Howard recently won a $1.8 million dollar verdict in a bankruptcy case out of the Central District of Illinois. The case, Pliura v. Brady (In re Brady), concerned several novel issues of law, including the standard for “justifiable reliance” under §523(a)(2)(B) of the Bankruptcy Code.   Background: the Creditor, the Debtor, and the Loan   The case concerns the Chapter 7 Bankruptcy of Bob Brady (Debtor), a prominent home builder in Central Illinois. After earning his MBA and spending several years in banking, Bob Brady joined Brady…
We covered the lipstick trademark oral arguments back in January – you can read about them here. Briefly, Johnny Love Vodka maker JL Beverage Co. sued Jim Beam over the “Pucker” flavor vodkas where both used lipstick kiss marks on their vodka based alcoholic beverages. Jim Beam beat the suit and received a determination that the marks were different enough that they did not infringe on the Johnny Love mark. Johnny Love appealed raising several issues – most importantly, the district court’s determination as to the likelihood of consumer confusion. The 9th Circuit opinion maintains the win that Jim…
Employment Issues in the Pandemic Employees who decline to show up to a physical work location based on a city, state or doctor’s coronavirus-related health order are protected from employer retaliation under a newly passed City of Chicago ordinance. Chicago-based businesses, defined as those with physical facilities in the city, or subject to its licensing requirements, must not take adverse actions against any employee following the  COVID-19 dictates of the Chicago mayor, city Department of Public Health, governor of Illinois, or their own treating healthcare provider. Continue reading
I had a call on Friday with an astute reporter that questioned what the point was with the multiple state reopening plans that emphasize food service as the line drawn in determining which alcohol serving establishments get to re-open and which remain shuttered or strictly “to go”. Across the country some states have made this a line in the sand with various degrees of what “serving food” means ranging from having on-premise kitchens to having co-committed food trucks on down to putting out menus for Pizza Hut delivery.  She raised an interesting and simple point – eating isn’t mandated in…
On Friday, the Illinois Liquor Control Commission issued an FAQ geared at implementing the recent Illinois Phase 3 re-opening criteria for taprooms, tasting rooms, bars, taverns, restaurants and other alcohol establishments serving food (that’s a requirement in this phase for most operations (more on that tomorrow as that type of criteria is being challenged across the country)). You can read the full FAQ here. Helpful information. We’ve got much of it below. Here’s the brief breakdown: You need to serve food unless your local liquor control commissioner lets you serve food on a roof or indoors where 50% or…
Minority shareholders in closely held businesses generally lack the ability to control the actions of a company which makes them vulnerable to oppression from the controlling shareholder or shareholders. Minority shareholder oppression claims frequently include allegations that the controlling shareholders have funneled company money or resources to themselves and attempted to hide the misconduct by excluding minority shareholders from accessing books and records. Minority shareholders in Illinois are not without recourse, however, as they have a statutory right to examine the corporation’s books and records. As the First District appellate court recently reminded us, the right to examine corporate books…
Filing Financing Statements and Determining Priority Determining Priority in Perfected Security Interests Who’s on first? This question decides what creditor gets paid, and what becomes an unsecured creditor whose best option is to recover pennies on the dollar for the money loaned to a business that purportedly had collateral. Priority to collateral needs determination to see who can seize it in satisfaction of its indebtedness to the business.  How and Where to File UCC Financing Statements   As a general rule, in all secured transactions involving a security agreement executed by the debtor, the debtor authorizes the secured party to…
What is an Agricultural Lien? What is a UCC Agricultural Lien As we detailed in our introductory article on security interests, a security agreement gives a creditor some form of legal right over the property of a creditor. While this definition is fairly straightforward, there are all kinds of quirks which are unique to agricultural liens. Under the 2001 amendment of Article 9 of the Uniform Commercial Code (UCC), agricultural liens are a special kind of interest for lenders. 810 ILCS 5/9-102(a)(5) defines an “agricultural lien” to mean an interest, other than a security interest, in farm products: (A) which…
What is an Agricultural Lien? As we detailed in our introductory article on security interests, a security agreement gives a creditor some form of legal right over the property of a creditor. While this definition is fairly straightforward, there are all kinds of quirks which are unique to agricultural liens. Under the 2001 amendment of Article 9 of the Uniform Commercial Code (UCC), agricultural liens are a special kind of interest for lenders. 810 ILCS 5/9-102(a)(5) defines an “agricultural lien” to mean an interest, other than a security interest, in farm products: (A) which secures payment or performance of an…
Filing Financing Statements and Determining Priority The Basics: How and Where to File a Financing Statements As a general rule, in all secured transactions involving a security agreement executed by the debtor, the debtor authorizes the secured party to file a financing statement describing the collateral. See 810 ILCS 5/9-509(a)(1). In addition, Article 9 provides that a person holding an agricultural lien that arises by operation of law and requires no written agreement may file a financing statement without consent provided the financing statement covers “only collateral in which the person holds an agricultural lien.” 810 ILCS 5/9-509(a)(2). Problem Ag…
How Do You Perfect a Security Interest in Agriculture? A “security agreement” is defined by the Uniform Commercial Code (UCC) as “an agreement that creates or provides for a security interest.” 810 ILCS 5/9-102(a)(74). A security agreement is “effective according to its terms between the parties, against purchasers of the collateral, and against creditors.” 810 ILCS 5/9-201(a). Or, put simply, a security agreement gives a creditor some form of legal right over the property of a creditor. To have an enforceable security agreement, creditors need to meet a series of strict requirements. Problem Ag Loan Call Now How Do You…
There are similar suits winding their way through different District and Appellate Courts at present. Quite a few, in fact. While the District Court cases appear to have stalled until consensus builds on how to progress discovery during the COVID-19 crisis, the Appellate Court cases at the 9th, 8th and 6th Circuits are starting up and winding down on an expected timeline. The 6th Circuit matter that did not follow Tennessee Wine precedent by remanding the case to the lower court for further proceedings looking for evidence of the State’s proffered health and safety claims had its last 6th Circuit…
As part of Illinois’s path to re-opening those businesses shut-down or limited by Illinois’s stay at home orders, the state government, through the Illinois Department of Commerce and Economic Opportunity, has released guidelines for a multitude of businesses and business settings to implement in order to re-open. There are plans and kits for retailers, manufacturers, offices, salons, spas, fitness centers, camps, and bars and restaurants, to name a few. The guidelines for bars and restaurants are extensive and you should review them prior to designing and considering your plans for re-opening to ensure compliance as deviations from the guidelines might…
On May 19, 2020, the Department of Labor issued revised interim enforcement guidance by the Occupational Safety and Health Administration (OSHA) concerning its recordkeeping requirement related to recording cases of COVID-19 for non exempt workplaces. Under previous interim enforcement guidance published on April 10, OSHA had temporarily exempted most employers from determining whether a recorded case was “work-related,” defined as an event or exposure in the work environment either causing or contributing to the resulting condition, or significantly aggravating a pre-existing injury or illness. Pursuant to the May 19 revised guidance, however, OSHA has effectively removed this temporary exemption, meaning…