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Los Angeles CA Corporate & Securities Law Blog

How can chapter 11 bankruptcy help a struggling business?

Starting a business in the United States can be risky. With an economy that has ebbed and flowed over the last several years, it is no wonder that some businesses are having a difficult time surviving. Fortunately, options exist for businesses that want to restructure their company and continue their operations.

A Chapter 11 bankruptcy is very different from other forms of bankruptcy in that it allows the business to remain alive. The process begins with a petition to the bankruptcy court. The business must then also file a lists of its assets and liabilities, contracts and leases, income and expenditures and a statement of financial affairs. Once the paperwork is filed, the debtor remains a debtor in possession until a plan of business reorganization is confirmed. Sometimes, a trustee will be appointed for the company.

Overview of businesses and securities laws

Businesses in California have many concerns. Along with ensuring their business remains profitable, their employees work hard and their costs remain low, businesses oftentimes must ensure that they are following federal securities laws. When these laws are not being followed properly, it may mean big trouble for small businesses.

Securities laws were created as a result of the stock market crash in the 1920's. The laws require businesses to disclose information to investors in order to properly reflect meaningful information. Two primary sets of securities laws exist today: the Securities Act of 1933 and the Securities Exchange Act of 1934.

California-based Hewlett-Packard divides rather than merges

Many times in the news, we hear of companies coming together in order to make a stronger joint force. These mergers and acquisitions seem to happen on a daily basis. Sometimes, however, the opposite of a merger occurs. Every once and a while we see a large company that decides to divide itself in order to make more profit.

California-based Hewlett-Packard is the most recent company to undergo this division strategy. The company announced recently that it will divide into Hewlett-Packard Enterprise and HP Inc. Hewlett-Packard Enterprise will be primarily responsible for corporate hardware and services while HP Inc. will run personal computer and printer operations. Interestingly, the CEO had said in the past that the company would remain a single entity.

Moving forward with a Chapter 11 bankruptcy

When business leaders make the decision to move forward with a bankruptcy filing, it is never an easy decision. However, choosing bankruptcy is often the best choice for a business in the long run. In today's economy, more and more businesses are being forced to make this difficult decision, and understanding the law is imperative for the future success of a business. A Chapter 11 bankruptcy allows for the reorganization of a business and the business can remain alive while paying off creditors.

When a business proceeds with a Chapter 11 bankruptcy, it first files a petition. The debtor may file this petition and, in some cases, a creditor can file the petition. Once the petition and other necessary documents are filed, a plan of reorganization must be filed with the court. This plan must include all information regarding assets, liabilities and business affairs. Once filed, it is up to judicial discretion whether the plan of reorganization is sufficient. Each creditor that is impaired by the process will cast a ballot and vote on the legitimacy of the plan.

Hanmi Bank and Central Bancorp merger finalizes

Another merger may affect California residents in the near future. Hanmi Bank recently announced its completed acquisition of Central Bancorp, Inc. This merger is believed to have a specific impact on Asian American communities.

The merger is part of a plan for the bank to become a leading community bank, appealing to residents from many different ethnic backgrounds. The bank now services a wide range of customers including Indian Americans, Pakistani Americans, and Korean Americans. The process of the merger went smoothly and California is now home to 30 branches of the community bank.

What is encompassed in the Securities Act of 1933?

The Securities Act of 1933 is a main concern for many companies involved in business litigation matters. This law is often referred to as the "truth in securities" law and covers two main objectives. The law works to ensure that investors have pertinent financial information when a sale occurs. It also works to prohibit fraudulent acts, deceit and misrepresentations during a sale.

Disclosing important information to investors is crucial because it allows the investors to make informed decisions in purchasing a company's securities. The law requires a registration of securities, which encourages this disclosure. Generally, any security sold in the United States must be registered. The registration requires that the company disclose a description of the property and business, company management information, a description of the security up for sale and financial statements that are certified by independent accountants.

Achieving the best outcome from a company merger

When a business in California is considering a merger with another business, there are many formalities and regulations that must be followed properly. Acting in a way that does not promote due diligence can prove fatal to a merging company. It is also crucial for companies to understand current market parameters and to take a pragmatic approach to negotiations in order to achieve the best outcome possible.

As companies begin the merger process it is important to review all of the other company's articles, bylaws, property, financial information, licenses and environmental issues. A complete knowledge of the other company is crucial when acting with due diligence. Due diligence can be described as acting in a way that a businessperson in a similar situation would act. Due diligence is essential for both past company behaviors and future behaviors in the process of the merger.

Business bankruptcy options

No California business owner wants to find themselves in the position where they are forced to file for bankruptcy. Unfortunately, in today's economy, the reality is that many businesses will be forced to do just that. Bankruptcy can be a positive step, however, and often allows businesses the opportunity for fresh start.

There are several different types of bankruptcy filings. Businesses typically file for a Chapter 7, Chapter 11 or Chapter 13 bankruptcy. Each has unique benefits and requirements.

Comcast merger lulls after questions from California lawmakers

There are many moving parts to a merger between two companies. Often times, these mergers will hit a bump or two as they move towards becoming one. Fully understanding the contents of merger documents as well as doing research proves imperative to a successful deal.

It is no secret that Comcast and Time Warner Cable have been in discussions about a possible merger to occur between the companies sometime in the future. As plans for the merger have advanced, however, several states are starting to ask questions.

Breach of contract remedies for businesses

Business owners strive to run their organization with efficiency. Sometimes, however, a business runs into a situation where another organization they have contracted with does not uphold their end of the bargain. Under these situations business litigation disputes can arise.

One reoccurring problem for businesses proves to be a breach of contract. When a second party does not fulfill its obligation, a business is left struggling to pick up the pieces. Companies that entered into a contract where an opposing party breached can seek legal remedies for the breach. Although many different types of remedies exist, the courts have generally provided for a remedy to help numb the pain of a breach in most situations.