Florida Business Litigation Blog
By: Charles B. Jimerson, Esq.
Overview of typical SBA 504 transactions
Banks and other lending institutions offer a number of US Small Business Administration (“SBA”) guaranteed loan programs to assist the development of small businesses. While the SBA itself does not make loans, it does guarantee loans made to small businesses by private and other institutions. Specifically, the US SBA 504 loan or Certified Development Company (“CDC”) program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates. The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. The SBA 504 program works by distributing the loan among three parties. Typically, a 504 project includes… Read Full Post
Business Judgment Rule – Shielding the Corporate Director from Personal Liability and Considerations of Efficient and Financially Reasonable Resolutions
When making business decisions on behalf of a corporation, it is presumed that corporate directors act in compliance with the above-referenced statute, by acting on an informed basis, in good faith and with ordinary care. This presumption is judicially created and is known as the business judgment rule. The business judgment rule is based on the premise that directors, for the most part, are more capable of making business decisions than are judges. Thus, where the rule is applicable, corporate directors will not be held liable for decisions made when conducting the business and affairs of a corporation.
Florida case law provides four elements which must be present for the business judgment rule to act as a shield to director liability: (a) the decision under review must be a business decision; (b) the director must not receive a personal benefit from the transaction ; (c) the director must exercise due care; and (d) the director must exercise good faith. F.D.I.C. v. Stahl, 854 F. Supp. 1565, 1570-1571 (S.D. Fla. 1994).
Therefore, the business judgment rule only protects directors only when they are carrying out their duties as directors, (e.g., making decisions and analyzing issues as directors). The business judgment rule is also inapplicable when the director furthers his self-interest. “A director is considered interested where he or she will receive a personal financial benefit from a transaction that is not equally shared by the stockholders, or will suffer a detrimental impact from the proposed transaction.” McCabe v. Foley, 424 F. Supp. 1315 (M.D. Fla. 2006). Read Full Post
A contract of guaranty is the promise to answer for the payment of some debt or the performance of some obligation by another, such that if the original debtor is unable to pay the debt or satisfy the contractual obligation, for whatever reason, the guarantor is himself liable on the default of the primary obligor. The guarantor’s knowledge of the execution or delivery of a guaranty is irrelevant, where the contract of guaranty speaks for itself and where the guarantor has not disclaimed knowledge of the guaranty. See Chris Craft Industries, Inc. v. Van Valkenberg, 267 So.2d 642 (Fla. 1972).
In a typical case, a President, CEO, or other officer signs a personal guaranty for the debts of his corporation and becomes personally liable for the debt upon the corporation’s default. Florida case law demonstrates that a simple, but well-drafted personal guaranty, which specifically enumerates the personal nature of the debt assurance, is adequate to form a legal and binding personal guaranty. Read Full Post
By: Charles B. Jimerson, Esq. and Amanda Finley
Specially trained employees are a valuable commodity in the business world, so keeping these skilled employees is of the utmost importance to employers. Many people have a skewed perspective of non-compete clauses as being manifestly unjust to the employee against whom it is being enforced. To address this sentiment, the Florida legislature has crafted, Fla. Stat. §542.335 in such a way that it ensures fairness to both the employee and the employer. Read Full Post