01.28.09
Posted in Uncategorized at 1:56 pm by Eric
Michigan just passed legislation to authorize the formation of “low-profit limited liability companies.” I’m not clear on whether it’s the same thing as a non-profit and, if so, why they didn’t just use “non-profit LLC.” Oh well. It’ll get flushed out as time goes along. Here’s the blurb my legal update kicked out:
Michigan Limited Liability Company (LLC) Act – defines low-profit limited liability company as an LLC that has included in its articles of organization a purpose that meets, and that at all times conducts its activities to meet, all of the following requirements: (1) the LLC significantly furthers the accomplishment of one or more charitable or educational purposes described in IRC 170(c)(2)(b), and would not have been formed except to accomplish those charitable or educational purposes; (2) the production of income or appreciation of property is not a significant purpose of the LLC; (3) the purposes of the LLC do not include accomplishing one or more political or legislative purposes described in IRC 170(c)(2)(d); in the absence of other factors, the LLC’s production of significant income or capital appreciation would not be conclusive evidence of a significant purpose involving the production of income or the appreciation of property (SB 1445; eff. 1/16/09)
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01.26.09
Posted in Uncategorized at 12:32 pm by Eric
Will preference actions heat up? Most assuredly, you’d think. Before the 2005 Bankruptcy Act, preference actions were more common than hangovers. Trustees and unsecured creditor committees went after past due payments to creditors during the 90-day preference period like frat boys after kegs. The 2005 Act made it easier for creditors to defend against preference actions, and I haven’t seen nearly as many. Still, the Act still allows for them. Don’t let your creditors get too deep into you as the economy deepens into problems, or you might find yourself in the double whammy: Your customer stiffed you, but you have to pay your customer. For more about preferences, I found this site reliable.
BTW: Confused by bankruptcy in general? The U.S. Courts has a great online primer. Check it out.
So I downloaded some American Bar Association tax podcasts earlier this month. I figured, “I’ll go for walks, listen to some tax news, get some fresh air. I’ll be buffer [yeah, right] and smarter.” Mercy me, it didn’t work. The podcasts were horrible. The subject matter was extremely narrow in scope (an hour discussion about housing credits?) and the participants seemed to be trying to emulate a morning radio talk show . . . but without the humor and personality (“That . . . is . . . a . . . good . . . point . . . Frederick. I . . . want . . . to . . . talk . . . about . . .”). Picture Don Imus and crew acting like Ben Stein’s character in Ferris Bueller’s Day Off, but more wooden. I’ve since found a different series of tax podcasts that concentrate on S corporations. They hold more promise.
You find last week’s news about GE depressing? Consider this piece of nostalgia: “The oldest company in the Dow is General Electric, and it’s the only one that has been there for more than 100 years.” William Bonn and Lila Rajiva, Mobs, Messiahs, and Markets (Wiley, 2007), p. 349.
Living in extraordinary times? Yeah, maybe: Interest rates are the lowest they’ve been in England since 1694 (that’s not a typo).
Fearless Predictions for the Week: Cardinals win, Dow Jones down, gold up, someone cries on American Idol, Obama does something Hollywood movie actors like, someone gets sued.
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01.21.09
Posted in Uncategorized at 4:18 pm by Eric
Michigan’s new Secondary Mortgage Loan Act makes it a misdemeanor for a person willfully or intentionally to coerce or induce a real estate appraiser to inflate the value of real property used as collateral for a secondary mortgage loan.
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01.12.09
Posted in Uncategorized at 2:44 pm by Eric
Another online business formation site to compete with.
For the record: I beat their price, if you don’t want any advice. In other words, if you just want someone to crank out the paperwork on a new limited liability company, my price will normally match or beat the online services. Thing is, as soon as someone calls for my services, they ask good questions: What’s the difference between S corporation or C corporation? Do I need an EIN? Should I transfer my land into the company? Do I need to take a wage? What’s all this about tenancy by the entireties? That’s where the time starts cranking up. I’m happy to explore all those questions in as much detail as you want . . . for a fee. But if instead you want rote document preparation cheaply (and for some people, that’s all they really need), we can do that too.
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01.06.09
Posted in Uncategorized at 2:20 pm by Eric
The Economist recently ran a piece about problems with European bankruptcy laws. From what I gather, the EU is looking more and more at America’s Chapter 11, which is “well tested, predictable and accepted by debtors and creditors alike.” Well, it’s “accepted,” but I’m not sure it’s acceptable, though I like Chapter 11 more than Chapters 7 and 13 (where individual consumers are able to abuse the system the most, the 2005 Reform Act notwithstanding).
Anyway, I found this piece of information interesting:
Because of the stark differences in treatment of creditors in Europe—Britain, Ireland, the Netherlands and Scandinavian countries are the friendliest, with Belgium, Germany, Portugal and Switzerland in the middle and France, Italy and Spain the worst, according to S&P—the next few years are likely to see jurisdictional battles. According to European Union law, a company can request to file for bankruptcy in the country where it has its “centre of main interest”, and creditors will fight to avoid the worst regimes. In countries where creditors cannot avoid a raw deal, companies’ cost of capital could rise sharply.
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01.05.09
Posted in Uncategorized at 1:17 am by Eric
The Economist recently ran a piece about problems with European bankruptcy laws. From what I gather, the EU is looking more and more at America’s Chapter 11, which is “well tested, predictable and accepted by debtors and creditors alike.” Well, it’s “accepted,” but I’m not sure it’s acceptable, though I like Chapter 11 more than Chapters 7 and 13 (where individual consumers are able to abuse the system the most, the 2005 Reform Act notwithstanding).
Anyway, I found this piece of information interesting:
Because of the stark differences in treatment of creditors in Europe—Britain, Ireland, the Netherlands and Scandinavian countries are the friendliest, with Belgium, Germany, Portugal and Switzerland in the middle and France, Italy and Spain the worst, according to S&P—the next few years are likely to see jurisdictional battles. According to European Union law, a company can request to file for bankruptcy in the country where it has its “centre of main interest”, and creditors will fight to avoid the worst regimes. In countries where creditors cannot avoid a raw deal, companies’ cost of capital could rise sharply.
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01.03.09
Posted in Uncategorized at 5:17 pm by Eric
The word “bankrupt” originally came from Italy, deriving from banca rotta, or broken bench. When a medieval moneylender could not pay his debts, his bench was broken in two, sometimes over his head.
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01.02.09
Posted in Uncategorized at 6:09 pm by Eric
Certain areas of law are known as “sexy.” They’re the areas that everyone’s talking about. In the 1990s, it was IPO/securities. A little while ago, corporate bankruptcy–Enron, Global Crossings, Collins & Aikman, Delphi–became sexy. Now, it looks like municipal bankruptcy might be the new sexy: The accountant who predicted the nation’s largest municipal bankruptcy says as many as 10 insolvencies will roil the $2.7 trillion U.S. market for state, county and city debt next year as public finances worsen amid calls for federal aid to state and local governments.
I don’t see much potential in southwest Michigan/northern Indiana. Most of the dire predictions are focused on California. But it’s still interesting stuff . . . and if you’re holding those “safe” municipal bonds, you might want to unload them (but never ask a lawyer for investment advice; see a professional in that field).
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I can’t say I’m shocked: 
