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Tampa Business & Commercial Law Blog

Corporate restructuring could save your business

When a Florida business experiences financial difficulties, it may seem as though there is no way to get back on track. It might appears as if the only option is to shut down and file for bankruptcy. However, corporate restructuring could turn things around and save your company.

As soon as you notice that the business is having trouble paying its debts, it would be beneficial to contact an attorney. The longer that you wait, the worse the situation might become, which in turn could greatly reduce your options. The earlier that recovery and restructuring efforts begin, the better the chance that your company can avoid insolvency, bankruptcy and closure.

Chapter 11 filed in wake of $256M settlement with feds

Millennium Laboratories, now known as Millennium Health, was considered one of the largest testers of urine drug samples in the United States. Florida readers may not have been aware that federal agencies accused the company of billing fraud, and a settlement was reached. In the wake of that settlement, Millennium filed for Chapter 11 bankruptcy protection.

The company allegedly billed federal health programs, Medicaid and Medicare for testing that was unnecessary. Eventually, Millennium agreed to pay the government $256 million in settlement. However, it appears that the company is unable to pay the full amount of the settlement and its other creditors.

Jawbone exercises its right to file business litigation

Wearable fitness trackers are a popular new way for Florida fitness enthusiasts to track their daily progress. Two companies on the West Coast, Fitbit and Jawbone, manufacture and distribute the devices. Recently, Jawbone exercised its right to file business litigation against Fitbit alleging antitrust violations.

Jawbone claims that Fitbit has wooed some of its employees, filed frivolous patent infringement claims and stolen some of its trade secrets. Jawbone goes on to allege that the only reason that Fitbit filed suit against Jawbone was to discredit the company in an attempt to maintain its status as a leader in the market. Jawbone is claiming that Fitbit will do whatever it can to impede the competition.

Business litigation filed for breach of settlement contract

Cooperation between Florida companies in order to further each party's business interests is common. Companies enter into agreements under which one party will provide goods or services to the other in exchange for monetary compensation. When one of the parties does not honor the terms of those agreements, the other party may decide to file business litigation for breach of contract, especially if other methods of resolving the dispute are unsuccessful.

A transportation business in the Lone Star state attempted to resolve its dispute with another company to no avail, so litigation was filed. The two companies had entered into an agreement whereby the transportation business provided equipment to the other for monetary compensation. The agreement was terminated sometime between January and April 2014.

The Chapter 11 bankruptcy process for Florida small businesses

When a small business in Florida experiences financial difficulties, it may not be necessary to close its doors. Filing for Chapter 11 bankruptcy could give the business the opportunity to reorganize. The process can be complex, however, and a small company's owner or owners need at least a rudimentary understanding of it before making the decision to file.

The majority of Chapter 11 bankruptcy filings are made by small businesses. For the Bankruptcy Court's purposes, "small business" means a company that has no more than 500 employees and no more than $2.19 million in debt when the petition is filed. With a limited exception, a company whose sole purpose is to own and operate real property may not file under this chapter.

Alternative dispute resolution may be the answer to litigation

One source estimates that approximately 43 percent of the country's small businesses will be either threatened with a lawsuit or be served with one. Florida business owners that find themselves in this situation may be dreading time-consuming and expensive litigation. However, there are alternative dispute resolution methods that might provide a viable option, as opposed to protracted litigation.

Many disputes are resolved through mediation. This process is often less costly than litigation and allows the parties involved to come up with creative ways to resolve their dispute. Mediation can be either binding or non-binding.

U.S. Supreme Court hears business litigation cases this session

With the technological advances and the birth of the Internet in recent decades, the pool of potential class action participants has increased dramatically in lawsuits filed against companies here in Florida and elsewhere. This has raised questions regarding the feasibility of allowing federal district courts to hear such cases. The U.S. Supreme Court may be answering that question in this newly opened session as it considers several business litigation appeals.

The Court is seen as being pro-business based on its latest rulings. The top cases heard by the court in the recent past were appeals of lower court decisions that favored someone who filed a lawsuit against a company. The Court reversed nearly 70 percent of those cases.

Buying assets from a company in Chapter 11 can be complex

When Florida companies are experiencing a period of financial distress, many turn to the Bankruptcy Court for protection from creditors and the opportunity to restructure the company in the hopes it will come out of bankruptcy in a better financial position. During Chapter 11 proceedings, assets may be sold in order to pay creditors. This process is not as simple as simply negotiating a buy/sell agreement.

Section 363 of the U.S. Bankruptcy Code governs the sale of assets during a Chapter 11. Therefore, a reference to a "363 sale" means that the assets being sold are from a company during bankruptcy. These sales must follow and comply with the Code, which includes the need for the Bankruptcy Court to approve them before they can be considered final.

Chapter 11 bankruptcy filed by Quirky, Inc.

In the excitement of creating something new, it can be easy to lose track of the financial aspect of inventing a product that is intended to be marketed. When this happens, some Florida businesses run into financial trouble and may need to file Chapter 11 bankruptcy in order to reorganize and obtain some breathing room from creditors. Quirky, Inc., a start up company that invented Wink, a smart home platform, recently filed for Chapter 11 due to the fact that it did not manage its finances adequately.

As part of the bankruptcy, Quirky is attempting to sell Wink. One of the company's largest creditors, Flextronics International, made an offer of $15 million to purchase the platform. However, Quirky is hoping for a better offer. Flextronics was one of many companies that provided the start up with an initial infusion of venture capital that came to approximately $175 million. In 2013, Quirky raised an additional $79 million.

Dispute resolution may be possible prior to foreclosure filing

The state of the economy over the last few years has made keeping some Florida businesses afloat a challenge. Meeting the company's financial obligations, including any mortgage liability, may be difficult. Before your lender files a foreclosure, it may be possible to come to a mutually agreeable outcome through alternative dispute resolution.

Waiting for your lender to file a foreclosure may not be in the best interests of the company. By the time that happens, your business could be in danger of closing forever. Most commercial lenders do not want to own your property, and they would rather you pay the mortgage debt.

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