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Los Angeles Corporate & Securities Law Blog

Let our experience guide you through business litigation

Business tasks can often only be delegated to those who one trusts but the unfortunate truth that many Los Angeles residents may be aware of is that many people often betray that trust and that betrayal not only cuts emotionally but can also have financial repercussions. As discussed previously on the Silicon Beach Business Litigation Attorneys blog, people often use a fiduciary to take certain decisions for them and to act in their interest, but when the fiduciary breaches this trust, it may be possible to engage in business litigation against them.

A breach of a fiduciary relationship claim can be brought through a civil action of negligence and it is often easier to prove than fraud. It must be shown that the two parties entered into a fiduciary relationship with one another and that the fiduciary breached this duty. A variety of damages could result from the suit, from the damages for lost profit, the salary paid to the employee or lost profits even if they were not actually incurred.

What is a fiduciary duty and who owes it?

Los Angeles businessmen and even residents know that, as much as they would like to control all aspects of their businesses and professional lives, it is often not possible to do so due to various factors, such as lack of time or knowledge. In these situations, they often engage in a fiduciary relationship with someone who can act on their behalf and make the necessary decisions for them.

A fiduciary duty is a legal one, in which the fiduciary is to act solely in the principal's benefit. The party that owes the duty is known as the fiduciary and the person to whom the duty is owed is known as the principal. An example of a fiduciary relationship is of the one between a lawyer and a client or a guardian and their wards.

California agency delays vote on cable company merger

As this blog has reported in the past, a merger is attempting to take place in which Comcast Inc., an Internet and cable television service, will overtake its competitor Time Warner Cable. The issue was to come before the California Public Utilities Commission for a vote soon, but has been pushed to early May. In addition, a public hearing regarding the pending merger that was to be held in Los Angeles has also been rescheduled for April 14.

Understanding venture capital and how it can help your business

Starting a business comes with many responsibilities, risks and potential rewards. If you're looking to raise additional capital and possible guidance with experienced professionals to assure your company's success, you may want to create a business plan tailored for a venture capital plan. By doing so, you'll be able to reach out to potential investors to establish a business relationship.

To do this, you should develop a plan that shows both the current financial plan, as well the company's future goals and visions and the potential for growth and success. Your plan should also specifically discuss the exit plan and how the company plans to repay the investment of the venture capitalist. You should be specific in stating how much capital you are looking for, and explain how the venture capital financing will be utilized within your business.

What are the different types of business bankruptcy?

Coming to the realization that your struggling business cannot continue and deciding to declare bankruptcy can be a heartbreaking decision, whether your business is in Los Angeles, Orange County, California or anywhere in the United States. Before you decide to declare bankruptcy, it is important to understand the differences between the three types of bankruptcy and how each of them would apply to your business matters and situation.

Chapter 7 bankruptcy involves an appointed trustee taking possession of all your property and assets. The trustee, along with your creditors, will attend meetings regarding the financial condition of your company. If you have assets, the trustee will sell them and distribute the monies collected to each of your creditors.

What are reverse mergers and how can they help a business plan?

Businesses in Los Angeles that are either just starting out and looking for a source of funding or are already established and in need of capital will often consider various strategies to achieve their business plans. One tactic that is frequently misunderstood is a reverse merger. Knowing what a reverse merger is and what it does can help a company decide whether or not to move forward with pursuing it.

A reverse merger is when a company that is privately held acquires what is known as a "shell company." This shell company is one that is publicly traded, but usually inactive. When this merger is completed, the private company will now be able to be traded by the public. This move is most often used by a company that is already established and has a certain amount of profits and revenue. The company will have established accounting principles and will be better equipped to fit into the requirements laid out by the SEC.

Sarbanes-Oxley, its details and the importance of due diligence

Doing business in Los Angeles can be tough, especially when trying to navigate various laws that might be somewhat misunderstood or complicated. In some instances, these laws are completely unknown to those who aren't immersed in the minuscule aspects of their reasoning and don't perform their due diligence. When trying to achieve business goals, having a handle on these laws can mean the difference between success and failure. One such law that must be dealt with in certain situations is Sarbanes-Oxley.

When moving forward with complex business transactions, companies have to comply with the Sarbanes-Oxley Act. A specialist in complying with the law will generally complete an external audit to look for areas of risk. In addition, software will be installed on the company's computers to find paper trails to make certain the law is followed. There are important sections of this law to consider. For Section 302, the corporate responsibility and financial reports will be examined. The CEO and CFO both must examine the reports. The reports can't have misrepresentations and must be fairly presented. Internal accounting controls are the responsibility of the CFO and CEO. They must disclose deficiencies, fraud or any other issue with the audit committee management. They must show material changes in the internal accounting controls.

What does the trustee or administrator do in a Chapter 11?

When a Los Angeles business makes the decision to follow through and file for Chapter 11 bankruptcy, there will be many issues that must be dealt with as the case moves forward. It can be a traumatic decision to make, both personally and professionally. Add in the complex business bankruptcy issues that might not be fully considered or understood and the process can be difficult to handle. It can help to understand the basics of the business bankruptcy process, including what it is that the U.S. trustee or bankruptcy administrator does.

The Chapter 11 bankruptcy has a U.S. trustee whose job it is to oversee the administration and its process. Everything surrounding the filing will be considered for oversight with the bankruptcy. When there is a Chapter 11 bankruptcy, there must be a meeting with the creditors. This is also referred to as a section 341 meeting. Both the creditors and the trustee can question the debtor under oath at this meeting. It can center around the acts of the debtor, the properties he or she has, their conduct and how the case is being administered.

Adhering to securities law when pursuing an IPO in Los Angeles

Companies in Los Angeles that are trying to improve their business through an increased amount of capital available will often consider initial public offerings. While there are numerous advantages to this, it's also important to move forward with it in the right way by not running afoul of the SEC and violating securities law. The last thing a company going public wants is for there to be an investigation as to the propriety of it. Knowing the SEC and its rules is the first step to ensuring there are no issues that will arise.

There are many reasons why a company will choose to file for an IPO, otherwise known as "going public." They include raising capital and increasing the chance for companies to garner capital in the future; increasing the amount of liquid cash and making it easier to sell stock; acquiring another business; attracting and compensating employees by offering stock and options to receive stock; and to raise the public profile. While these advantages are attractive, companies thinking about initial public offerings also need to remember other issues that can come up.

What are the benefits of California reverse mergers?

Doing business in Los Angeles can be a difficult process. There are many issues that have to be considered when trying to succeed. One is deciding when it might be beneficial to consider various kinds of mergers. Reverse mergers are complex business transactions that have certain benefits and risks that must be assessed before moving forward. Those who understand what the process is and the potential benefits of a reverse merger will be in a position to make an informed decision as to whether it's a preferable option or if other strategies will be better.

In a reverse merger, a private company is acquired by a "shell company." This shell company is publicly reported, but has limited or nonexistent operations. Often the private company wants to get into the U.S. markets and gain capital. For garnering greater access to capital markets and a liquid influx of cash from stock being on the stock exchange or a market, a private company might want to think about a reverse merger. If it is a privately owned company, there is a limit to the kinds of equity it can get. On the other hand, public companies can receive funding from a larger number of investment entities.