Blog, Business Litigation
The “Binding” Letter of Intent, Corporate Acquisition Strategy Via Litigation
KGR helped the client enter into a “binding letter of intent (LOI)” with minority shareholders to purchase the minority shares of company. The goal was to acquire the entire target company by enforcing the shareholder agreement rights and obligations. The shareholder agreement contained various triggers for compelling the sale of shares, or the right to purchase shares. The majority shareholder also happened to be terminally ill with serious health and potential capacity issues, thus certain corporate avoidance actions were subject to attack. The successful litigation strategy was based on strict interpretation and enforcement of the shareholder agreement and enforcement of the LOI as a binding unconditional minority shareholder contract, not a mere conditional statement of intent. The result was an industry impacting business resolution and the acquisition of the target company via the LOI strategy and contract enforcement strategies. For a thorough discussion of these issues, or if you have other questions regarding your minority shareholders rights, please contact David Wright and Kevin Koons, or one of our other attorneys here to discuss your situation. It would be our pleasure to assist you.
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David Wright
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Blog, Business, Real Estate
Update: Indiana’s New Witness Requirement on Recorded Documents
Change of an ‘Or’ to ‘And’ Cause Challenges The recent rewording of a law has caused quite a stir in the business and real estate communities. That’s because changes to Indiana Code 32-21-2-3(a), effective July 1, 2020, now require witness signatures on recorded documents. Senate Enrolled Act 340, passed by the Indiana Senate, merely changed an “or” to an “and” but by so doing, it changed this well-established law to require a common law “proof” of a disinterested party to the transaction serving as a witness to the execution of an instrument. This requirement caught many off guard, necessitating re-documenting transactions or hurriedly changing forms. The perceived requirement of having the witness swear that he or she is not a party to the real estate transaction (deed, mortgage, lease, etc.) disclosed by the instrument and does not “benefit” from the transaction adds a layer of complexity to closings. An additional person must now participate in the closing process and swear to an oath. Many financial institutions are reluctant to have their employees give an oath, which rules them out as witnesses. Furthermore, it’s unclear how “benefit” is to be defined in this scenario. Could a year-end bonus based on loan production technically constitute receiving a benefit from this one transaction? While certain financial institutions may not permit their employees to witness signatures, title companies appear to be fine with their employees acting in this role. Rumors have swirled that many of Indiana’s 92 county recorders are ignoring the statute and accepting documents without witness signatures, provided…
Banking and Commercial Transactions, Blog, News, Real Estate
Notarize & Prove Recorded Documents in Indiana Effective July 1, 2020
Effective July 1, 2020 A recent change to Indiana Code section 32-21-2-3(a), which takes effect on Wednesday, July 1, requires all written instruments (such as deeds, mortgages, powers of attorney, affidavits, and any other documents that must be recorded in an Indiana county recorder’s office) to be both notarized and proved. Without going into the nitty gritty details (you can find those on the “directive” from the Indiana State Bar Association ), every recorded instrument must now include a witness statement to prove that the person whose signature is notarized signed and delivered the instrument in the witness’s presence (and the witness’s signature must also be notarized).
Blog, News
Our Community
The lawyers and staff of Kroger Gardis & Regas, LLP were shocked and appalled at what happened to George Floyd. But it’s not enough to be appalled and to hear the pleas for change; meaningful reform is necessary. We express our sincere hope for a peaceful week and ask our elected leaders to reflect, listen and act thoughtfully on the many issues which face our city, our state and our nation. We all must work together to end the violence, disparagement and lack of understanding, recognize we have serious issues to address, and to thoughtfully heed the calls for justice and unity in our community. As a firm established to advocate for the rights of all citizens we fervently support those expressing their right to speak out individually, and to assemble collectively, to demand an end to the racial injustice so prevalent in our society. Our community’s leaders must heed the call to end disparate treatment of minorities by our law enforcement ranks and immediately begin the process to permanently change how we protect and serve our neighbors, with the active input of those most affected by the disparities. We are in this together. While we don’t have the answers, we want to help find them. Calls for the immediate establishment of a task force to address these issues is a sound one, and we stand ready to support and participate in that effort. Kroger Gardis & Regas has been located in the heart of our Indianapolis urban core for more than 80 years. We aren’t…
Bankruptcy Law, Blog, Business, Business Litigation
Who Do You Pay When the Business Can’t Pay Everyone?
Which Creditors To Pay? This doesn’t seem that tough a question to most folks. You’ll pay the creditors you need to keep your doors open and delay paying the ones who may let you slide or are just not that vigilant when you are past due. Well, an important different analysis will likely lead to different priorities. Consider first to whom you may be personally liable if the doors do close. Taxing authorities and holders of guaranties must be at the top of the list. Then consider whether you have it in you to guide the company through the dark times. First, even though you set up a corporation or limited liability company to own your business and protect your assets from company debts, some claims for unpaid taxes create personal liability for those associated with the business. If you are focusing on who to pay to keep the doors open, you will likely not consider the IRS and the Department of Revenue (in most states), who will often be about the last creditors to show up when you don’t pay on time. But often liability can pass to the owners, officers, or even an employee entrusted with making decisions on who to pay (yes, even the bookkeeper can be personally liable). Personal Liability Personal liability for unpaid business taxes generally arises from the failure to pay sales or use taxes and federal payroll taxes. In the case of sales/use taxes, that money never belonged to your business. The business collected it for the state and…
Blog, Business, News
COVID-19 AND CONTRACT BREACH
With the American economy grinding almost to a halt due to the Covid-19 Virus and the accompanying onslaught on National, State and local directives and executive orders restricting, and in some cases, preventing the operation of many businesses, performance of contracts by the affected business owners has become all but impossible for reasons totally beyond their control. These owners have contacts with key employees, contracts to supply goods, real estate leases requiring them to be open for business, contracts to manufacture and supply goods to others, franchise payments, product warranty repair claims in areas where travel is restricted, and the list goes on and on. The business owner asks “Am I liable for not doing something I can’t do, even if I want to do it”. As with so many other things in the law, there is no bright line test to answer the question, its fact sensitive and more than one legal principle needs to be considered if the business owner is to be rescued from liability. The law (and in most cases – Indiana) recognizes several defenses to enforcement of a contract against a party who, through no fault, cannot perform. In summary, these are (i) Force Majeure, (ii) Impossibility of Performance, (iii) Commercial Frustration and (iv) Impracticability of Performance. Of these defenses, only Force Majeure is a defense which must arise from the terms written into the written contract. Force Majeure – Is Covid 19 an Act of God? Indiana has few cases discussing force majeure. A force majeure clause is a “contractual provision allocating the…
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