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Houston Business & Commercial Law Blog

Bank files lawsuit over alleged default by borrower

In order to carry out day-to-day operations or invest in new plant or equipment, a business owner may borrow money from a financial institution. According to the existing federal and Texas laws, the business must repay the loan according to the terms and conditions of the loan agreement. However, it is not uncommon for the business that borrowed the money to default on the loan and face legal action from the creditor. Sadly, such situations can cause the business and the business's owner to face major difficulties if the situation is not handled properly.

A recent incident in Texas is a good example of such a situation. According to a news report, the Community Bank of Texas recently filed a lawsuit in which it is accusing a consulting corporation and its owner of breach of contract and fiduciary negligence. The lawsuit alleges the consulting company borrowed $45,000 and signed a promissory note in November 2013. The lawsuit further alleges that the contract was personally guaranteed by the owner of the consulting firm. A news report on the lawsuit does not indicate the nature of the claimed fiduciary negligence.

Using ADR in a federal contract dispute-Part II

Houston companies that do business with the federal government occasionally get into contract disputes. The previous post on our blog site discussed what happens when a business owner chooses to resolve a federal contract dispute using alternate dispute resolution methods.

However, in some cases, ADR methods may not be successful. According to the Civilian Board of Contract Appeals, when ADR fails to lead to a resolution the dispute is generally referred back to the presiding judge. If that judge was the ADR Neutral, a special set of rules and regulations are applicable.

Using ADR in a federal contract dispute-Part I

In most contract disputes in Texas, a common avenue of resolution is for the aggrieved party to file a lawsuit, but this is avenue is generally unavailable initially when the dispute involves a federal government contract. Claims by government contractors regarding federal contracts must be submitted to a government Contracting Officer. If the company is dissatisfied with the Contracting Officer's decision, there is a right to appeal the case to the Civilian Board of Contract Appeals or file suit in the U.S. Court of Federal Claims. The CBCA encourages the use of alternate dispute resolution methods to resolve claims.

For corporations doing business with most U.S. agencies, ADR must follow a specific procedure, according to the CBCA. The board was established in 2007 by Congress pursuant to the Contract Disputes Act of 1978. Both parties to the dispute must agree in writing to seek the CBCA's ADR services. The CBCA chairman will then appoint one or more judges to act as a neutral mediator to help resolve the contract dispute. The parties to the contract dispute must then sign an agreement that establishes the guidelines for mediation.

How do at-risk limits affect a closely held corporation?

The owners of closely held businesses in Texas often have a number of questions about taxes and how the federal tax code applies to them. For example, the tax code limits the ability of investors in many closely held corporations to claim a deduction for business losses.

The at-risk limits restrict the losses a business owner can deduct for a business activity to only the amount actually at risk for the specific activity in question. This rule applies to many closely held corporations, although not to S corporations.

Four keys to quick business growth for Texas entrepreneurs

Almost everyone in Texas who starts a new business wants to make it grow as quickly as possible. Fast growth does not happen by accident. Here are a few tips, from a recent column in a national business magazine, on how entrepreneurs can quickly grow their businesses.

First and foremost, an entrepreneur needs to ensure that his or her performance standards are set as high as possible. If the entrepreneur determines that he or she cannot live up to those standards and expectations, then stepping back and examining both performance and standards can help the entrepreneur take the necessary corrective actions.

Entrepreneurs with innovative ideas may need legal protection

Texas is well known for promoting new businesses. One of our older posts discussed a study that ranked Texas's capital city, Austin, as one of the best cities for entrepreneurial growth. Among those entrepreneurs who are establishing businesses in the state, there are many who have creative new ideas that form the backbone of their venture. These could be in the form of innovations or inventions, creative works or some other type of intellectual property that must be protected by patents, copyrights or trademarks.

Intellectual property rights are often key to a business's success. A misappropriation or theft of these intellectual properties can prove to be disastrous for the business. However, merely understanding the risks does not guarantee that the entrepreneur will be able to protect the intellectual property at all times. Therefore, it is generally very helpful for the business owner to consult an attorney about how to safeguard the intellectual property.

Texas beverage company sues over soft drink trademark

Trademarks are often key to a business's success and revenue. Litigation sometimes ensues when a business believes their intellectual property is being misappropriated. A recent lawsuit filed by a Texas-based company in federal court in Dallas against a smaller competing business over allegations of infringement of trademark highlights this situation.

Austin-based beverage company Big Red filed a lawsuit against a small beverage company from Pennsylvania, the Catawissa Bottling Company. Big Red accuses Catawissa of selling a product that is very similar to Big Red's flagship beverage. Big Red alleges that Catawissa's Big Ben beverage is "diluting" Big Red's trademark.

Essential information in a certificate of formation

Residents of Texas who are planning to form a new business should understand exactly which details a certificate of formation should contain. A certificate of formation is the required document that must be filed with the appropriate government state agencies when forming a limited liability corporation. The certificate should contain the name of the corporation that is being formed, along with the type of corporation that the entrepreneurs wish to build.

This certificate also should contain the address of the initial registered office of the corporation, as well as the name and address of all owners, partners or trust managers, depending on the type of corporation being established. If the corporation is formed after a merger or conversion, supporting documents should be provided with all other necessary information. Information on a prior form of organization and jurisdiction of formation of the converting entity also should be provided. If the organization is not a limited partnership, the owners need to provide an estimated period of existence, unless the intent is to have the organization exist permanently.

Merger and dissolution of non-profit corporations

For business owners in Texas, mergers and acquisitions are common. Many people may be aware that the regulations and provisions regarding mergers are different for non-profit and for-profit organizations. Non-profit organizations generally refer to those organizations in which the income is not distributed to any of its members.

According to the law, a merger is possible between two or more domestic non-profit organizations. The organizations also can merge with one or more foreign non-profit organizations. A domestic non-profit organization may endanger its charitable status if it merges with any corporation other than another non-profit organization. Every merger is subject to approval by the board of directors and other members who have voting rights. The merger plan needs at least two-thirds of the votes to pass. A domestic non-profit organization may merge with another organization only if the domestic corporation doesn't cease to exist.

Texas company files lawsuit over two-year-old contract dispute

Business owners in Houston, Texas, are aware that mediation and arbitration are often the more effective ways to settle a contract dispute. However, certain contract disputes demand that the case be litigated because of the irreparable damage that the dispute caused the two parties involved. A recent lawsuit filed in a Texas court by a chemical manufacturing company against another chemical company from Michigan centers around a manufacturing dispute began in 2013.

According to news reports, TM Chemicals Limited Partnership of Galveston County, Texas, has filed a lawsuit in its local court against SPE Wax Technologies LLC, a company based in Michigan. The lawsuit involves a dispute that began in 2013 when those two companies entered into an agreement to process tolls for certain products at TM Chemical's Texas laboratory by using the process and technology provided by SPE Wax.

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