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Blog Posts Tagged "startups"

Creditors’ Rights Trump Ownership Restrictions in LLC Operating Agreements

A recent South Carolina Supreme Court decision affirms the supremacy of creditors’ foreclosure rights, and sounds a cautionary note for LLCs. The state’s high court said that LLCs can’t use an operating agreement to force a creditor to sell a distributional interest it obtained via judicial foreclosure. 

The ruling came in Levy v. Carolinian, LLC, a case involving an LLC that owns an oceanfront hotel. One of the members, who owned about a quarter of the LLC, found himself on the wrong end of a judgment for $2.5 million. Creditors obtained a charging order – essentially a lien – against their debtor’s distributional interest in the LLC. The creditors then foreclosed on its charging lien and purchased the member’s distributional interest at public auction. 

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Business Start-up Legal Checklist

Anyone who has started a business can tell you that they were surprised at how many legal and regulatory hoops they had to jump through just to open their doors. My husband and I experienced this first-hand when we opened a coffee shop and retail business in Greenville. We’re both lawyers, and we still found the process daunting. 

When you start a business, be sure you have the right people in place to help you. A lawyer will be one of them, and here’s a checklist that will help new entrepreneurs stay out of trouble and increase the chances of getting their business off to a trouble-free start. 

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LLC or Corporation? Which Is Right for Your New Business?

For most entrepreneurs, the choice of business entity comes down to an LLC or corporation, since both insulate personal assets from liability claims. LLCs, S corporations and C corporations all have advantages, depending on your business goals. 

Generally, the comparisons among the three will center on taxes, operating flexibility and treatment of investors and shareholders. 

Here’s a quick overview of these three alternatives that will give you a starting point for considering your options before you talk to your attorney. 

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How to Write a Workable Non-Compete Agreement

Employers invest time, training and trust in key employees, and they don’t want to see them walk out the door and help a competitor. Non-compete agreements can protect your investment in employees – but only if they’re written with reasonable restrictions. 

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Don’t Allow Your Business to Become a Victim of the Dreaded Ds

Is your closely-held business protected from the five dreaded Ds – death, disability, divorce, disaster and disagreement?

Turmoil, and even business failure, can follow if you don’t have a legal succession plan in place when any of these events occur. While this may not offer you any comfort, you are certainly not alone if you haven’t yet set up a succession plan: fewer than half of closely-held and family-owned businesses have a plan in place that covers these contingencies.

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