Bar prep and then joining a solo practitioner (who is a good friend and mentor of mine) practicing criminal defense. We had a trial date set for September in SDNY that I was super excited for but wouldn't you know it, client had a come to Allah moment and is now changing his plea.
took 6 months, but I just put in my notice. I'm going solo. I must be fucking crazy, but it's the right move for me and my family. partnering with the person I previously mentioned
Anyone messed around with CoCounsel by Casetext? I signed up for a free trial and it's pretty impressive. I asked it to prepare a memo on a topic I recently had to look into, and the memo it produced hit all the requirements. It produced a summary and then included relevant statutes, regulations, and even summaries of the relevant case law (with links to the cases). Yesterday, I asked a clerk to prepare a memo summarizing the law on a particular topic in about a dozen states. Totes going to use a memo prepared by CoCounsel to check his work
Oranjello or anyone else: Client bought a NJ corporation (purchased 100% of stock) in 2010 for ~1.8mm. After moving to Texas, client decided to convert the NJ corporation to a Texas corporation. Did this by filing a certificate of conversion in Texas together with certificate of formation (articles of incorporation) of the converted corporation. Completed in 2020. The converted TX corp hired me a few months ago for various tasks. During the engagement, I realized that the client had no corporate documents, minutes, bylaws, etc., so I advised we should clean everything up back to the conversion. Going down this rabbit hole, I realized no Plan of Conversion was ever prepared (despite a contrary representation to the State of Texas in the Certificate of Conversion). I started to prepare Plan of Conversion under NJ law to be ratified. I then learn that NJ does not allow a domestic corporation to convert to a corporation of another state (In fact, NJ just changed this law in its current session but the change won't go into effect until November). When a foreign entity converts to a TX entity, under TX law, the conversion must comply with the laws of the converting entity's state of incorporation to be valid. So, while TX isn't aware that the conversion and formation of the company in Texas is defective, it is. I then order the corporate documents from NJ to find out that the NJ corporation was voluntarily dissolved in 2021 (after the purported conversion). Since 2020, the client has been operating under the Texas corporation, using the original EIN of the NJ corporation and filing its returns as though this was all just a standard Type F reorg/conversion. Now I'm concerned: (a) we have no valid Texas corporation because the formation was defective and formed under false certification; and (b) we have no NJ corporation because it was voluntarily dissolved in 2021. What does this mean? No liability protection against creditors? Defaults under various commercial contracts/loans? Tax consequences? The tax issue is the kicker. We could fix the TX corporation or form a new one, but no matter how you slice it, we have a dissolution of the NJ corporation with a deemed distribution of all its assets to the sole shareholder, followed by a contribution to newco. If the company is conservatively worth a couple of million dollars, then that's a huge tax hit just to accomplish what should have been a tax-free conversion. I was hoping we could reinstate the NJ corporation and then have it do a tax-free merger into the Texas corporation (and then amend prior tax returns to reflect the transaction). But that doesn't appear to be an option because it doesn't look like NJ allows you to reinstate a voluntarily dissolved entity more than 60 days after dissolution. What would you do here? Any creative ideas? When I explained the situation to the client, he immediately put me on hold and patched in his CPA (who actually referred this client to me). The CPA structured everything, drafted all the documentation, and filed the conversion document. He took ownership of it all until I explained how fucked it was and then he started explaining that they are just a consulting firm. They prepare the documents based on what the client tells them to do, and in so doing, they assume the client has independent legal counsel.
I am in state court, so this is a specific question but curious if I can get some help. have an answer deadline. 4 claims asserted. If we file a MTD on just one claim, do we still have to answer at the deadline or does that stay the answer deadline? my partner thinks the answer is yes in federal court. just trying to think where the rule would be located. ARCO any thoughts?
In Florida when I did defense work, I filed an answer and affirmative defenses to the complaint, and when I got to the controversial count I would just say “this count is subject to a separately filed motion to dismiss.” Then I would file the answer and MTD concurrently.
You can file a Partial MTD and wait until the Court rules before you need to file your Answer. I’m in a deposition in Maui right now but will send you the citation later today.
For state law purposes, I'd look into whether they had a de facto corporation despite the defective conversion. As to third parties, they may have. For federal income tax purposes, state law corporate status is irrelevant and federal law controls. See PLR 200806006 (citing Ochs v. United States, 158 Ct. CI. 115, 119, 305 F.2d 844,847 (1962)). The Ochs case was looking at the code from the 1940s, but it provides at least a good starting point: see if you can make a claim that the parties were operating an "association" and therefore under Reg. 301.7701-2(b)(2) they were a corporation for tax purposes (both in NJ and TX pursuant to a reorg). I've never really looked into "associations." You'd think a conversion by NJ corporation to a de facto TX corporation would amount to an association, but I honestly have no idea. I'd also look into the liquidation reincorporation doctrine (doubt it applies, but may not hurt to look into the step transaction doctrine, too). I'd find as much favorable law as possible and then put it together for a PLR, emphasizing that the taxpayer relied exclusively on advisors and seek reasonable cause relief to the extent penalties and interest apply. It's fortunate they continued to use the EIN and pay taxes, so the government isn't really prejudiced by the state law fuck ups.
Defamation case. Two uber wealthy parties. Plaintiff and his wife relocated from Steamboat to Maui a couple of years ago. First and likely the only time I’ll get to travel to Maui for work.
This issue varies from judge to judge. In federal court, some judges have standing orders that require answers as to counts that are not subject to the motion. As a technical matter, Fed Rule 12 (a)(4) alters the answer time until a Rule 12 motion is denied or granted, but has the caveat unless ruled otherwise. The rules otherwise part lets judges set their own standing orders. Without a court ruling otherwise, 12(a)(4) tolls the answer date under 12(a)(1) until a ruling on the 12 motion.
Some states allow a “nunc pro tunc” order by a court in equity to correct past corporate formalities that were not technically met when filing an original document. Think of it like a reformation, and refiling to correct the defect. The nunc pro tunc applies retroactively to the original filing act, a plan of conversion or dissolution. I’m unclear whether NJ allowed conversion or only will allow it after November. If it was not allowable when improperly done earlier, you may be screwed under this route because equity can’t do what isn’t allowed in the first instance. You also could check to see whether dissolution was proper, and possibly nunc pro tunc the dissolution to correct the error, reinstate the corporation, then do your tax free merger. You aren’t reinstating to deactivate the corporation for any purpose except the merger, then cease its existence, so equity may allow it.
I’m currently doing a pro bono for a Boy Scout troop which cleaned and cleared an old cemetery, but now no one knows who owns the property and must maintain it. The cemetery has 25-35 graves dating from 1801-1881, and was abandoned for at least 60-70 years in a section of town bordered by a railroad and then steep hillside, with no roads and no one knew it was there. It’s been 142 years since a burial. We found a cemetery trust was created in 1851 to own the property, and county records show it owns the property, but all trustees are long deceased. We think we can get a judge to dissolve the cemetery trust, and think the cemetery escheats back to the state. The title chain is unclear, and there may be an issue whether this land was ever sold by the federal government to anyone when Ohio transitioned from a territory to a state in 1803.
Some states are weird about outbound entity conversions involving corporations. My read on his post is that NJ did not allow a NJ corporation to convert to a non-NJ entity. They’ve updated their law to permit such outbound conversions beginning in Nov. After looking at TX law, they permit ratification of defective corporate acts, so he could ratify everything back to the date of conversion and likely be fine without having to go to court at all. To make sure, though, he could also petition a Texas court to rule on the ratification, which is authorized by statute. Not sure if TX addresses it Stagger Lee , but when I’ve had “internal” corporate acts that are defective (e.g., the board of directors has been illegitimate for decades), I’ve suggested that clients “come clean” and disclose it in amended and restated articles, which are public record and address many of the same notice concerns and concepts of ratification statutes. Also thinking your tax issue is probably not super costly, too. I’ve done an F reorg for a CA nonprofit corporation that was redemosticating to another state, and CA law requires the AG to approve certain dissolutions/conversions. To speed up that process, we transferred all assets and liabilities of the CA nonprofit to a newly formed nonprofit corporation formed under another state’s law, which, at least in the nonprofit context, was sufficient for fed tax purposes to qualify as tax free and guidance permitted continued used of the CA corp’s EIN by the new nonprofit Corp. Could probably find the authority if necessary. I’m assuming there’s some kind of bill sale from NJ to TX Corp, right?
Best free legal advice I've gotten in a long time. I had thought about the de facto corporation doctrine and I think it helps us against collateral attacks on corporate existence by private parties but still leaves us open to attacks by the State. I need to look into this. I suppose we could file a Certificate of Correction or some other curing document in Texas. From there we still need to figure out how the assets/business of NJ corp got to the TX corp tax free. Not sure the de facto corporation doctrine helps us in NJ. We voluntarily dissolved there. I really like the verbage in PLR 2008606006. It definitely seems to be the starting point. I see two important distinctions there, however: First, the corporation there was involuntarily dissolved, which allowed the taxpayer to reincorporate under State law. Here, the NJ corp was voluntarily dissolved and therefore cannot be reinstated. In the letter ruling, it says the taxpayer "reincorporated" (good wording), but the facts sound like it was really just a state-law reinstatement. Perhaps the distinction is irrelevant because we are taking the position that NJ corporation continued as a corporation by virtue of being an association taxed as a corporation after dissolution. But that brings us to the second issue: Second, the taxpayer in the letter ruling reincorporated as the same entity in the same state. Here, we have a new corporation formed separately in a different jurisdiction. So while, for tax purposes, we may be able to continue as a corporate association as the successor of NJ Co, I question whether we can ever reinstate/reincorporate that entity in NJ or otherwise get de facto corporation status for state law purposes. Without a valid state-law corporation, I don't think we can convert into a Texas corporation (matter of state law). Perhaps we can do a Type B reorg, however, with the surviving entity being the Texas corporation. The problem with that is we would have to have a new EIN for the surviving corporation. We've been operating under the NJ corp EIN under the TX corp name all along. Don't know much about the reincorporation liquidation doctrine, so I'll look at it. On a quick Google search from my phone, it seems it only applies where there was a valid statutory merger or perhaps certain other valid 338 reorgs. Thinking off the cuff right now. The coffee hasn't kicked in yet.
I worded that poorly. NJ doesn't allow domestic corporations to convert to corporations of other states. This legislative session, the law was changed to allow these conversions, but that law won't go into effect until November. I think the dissolution was done properly. I'll look into the nunc pro tunc proceeding, but ideally this would be something we could cure administratively without court intervention. The problem is we have very time sensitive transactions pending for which we need a clean corporate history. Don't have time for court proceedings, if they can be avoided.
The only reason the cemetary was discovered is that a housing developer was plotting a new neighborhood on the ridge above it. They saw the wooded area bounded by the train and a stream, and nothing else in the narrow valley, so they were looking into access for a walking/bike path, then discovered the green space was a cemetary surrounded by 80-100 year old trees.
TX law is very liberal on permitting ratifications. Not sure if ratification works to cure defective formation. There's no bill of sale or anything. The client just filed the certificate of conversion and assumed that the NJ corporation converted to a TX corporation by operation of law. I would like to avoid there being any bill of sale/assignment if a Type F reorg is on the table or to leave open the Type B option. If we transfer out the assets, we may be confirming that there was in fact a taxable liquidation/contribution. If the tax-free options don't work, we would need the bill of sale/assignment just to establish asset/business ownership in the future (e.g., due diligence in future sale of business). The more I think about it, the more I think a Type F reorg may be possible, even with defective corporations. I'm just not sure how to document it yet under the facts.
I’m thinking a nunc pro tunc or similar corrective action on the dissolution in NJ. Something to the effect of: We dissolved because we thought we had a valid corporate transaction but discovered we did not. We need to reinstate the corporation for the sole purpose to correct the mistake. After reinstatement, the corporation immediately will cease to exist after merger. The effect will leave possible creditors or third parties in a better position because any liabilities transfer by merger, as opposed to end at dissolution/windup. If you need a court in equity to bless that transaction, seems fair.
That PLR was the first thing I came across with about 5 minutes of research. I was citing it for the proposition that federal law controls "corporate" status rather than state, but it and its line of reasoning may open the door to more relevant authority. The liquidation-reincorporation doctrine is pretty murky at the edges, and is of lessening importance after the repeal of General Utilities, but it may be something that would allow you to collapse the two corporations together to say they're really just one continuing corporation. I haven't looked into it all that closely either but it came to mind based on your facts.
After reading some materials, I'm leaning towards taking this position: TexCorp. was incorporated in October 2020 pursuant to Certificate of Formation and Certificate of Conversion. Certificate of Conversion is likely invalid under TBOC Section 10.102 and Certificate of Formation likely defective. Probably can correct defect. Alternatively, we argue de facto corporation exists in TX. NJCorp dissolved effective June 2021 by voluntary dissolution. No assets ever transferred out. NJCorp. continued its corporate affairs after the purported conversion and after the dissolution. By continuing its affairs after dissolution, NJCorp became an association ("NJAssoc"). See Ochs. Transitioning to an association did not constitute a liquidation and distribution to NJCorp's shareholder for tax purposes, and NJAssoc was permitted to continue using NJCorp.'s EIN and file returns under it (PLR 13143207). As an association, NJAssoc is a "corporation" for tax purposes. Thereafter Type F Reorg is commenced: (1) NJ Assoc transferred all of its assets and liabilities to TexCorp. in exchange for stock of TexCorp., followed immediately thereafter by (2) a distribution of all TexCorp. stock to sole shareholder of NJAssoc. Result is same shareholder of NJAssoc (and NJCorp before it) owning all of the stock of TexCorp. TexCorp now operates the business as the resulting entity. I believe TexCorp. can continue using NJAssoc/NJCorp.'s EIN under the general EIN guidance issued by IRS in accordance with Type F reorganizations. I'm not aware of any issues here that would prevent this result. I know one requirement of Type F reorg is that, immediately after the reorg, the resulting corporation (here, TXCorp.), can't hold any assets other than the assets acquired from the transferor (NJAssoc). Since TexCorp. has been conducting business the last couple of years (albeit under NJAssoc's EIN), this requirement isn't satisfied unless the transaction is backdated to prior to TXCorp's commencing its business. I know it's a big no-no to backdate documents to achieve tax advantages, but here, I think we have a plausible argument that we're just memorializing the deal as intended at the time of the transaction. We are documenting the substance of what was intended, albeit not in the same technical form (which we were unable to achieve due to technical defects in documentation prepared by incompetent advisors). Thoughts?
Alternatively, we say that the above reorg occurred in Q4 2020 right after the purported conversion and prior to the dissolution of NJCorp. That would save us from having to prove up that NJCorp continued its operations after dissolution as an association and limit any gap of operation by TexCorp. between its formation and receipt of assets -- during which time it would have acquired assets other than NJCorp assets (which would kill the Type F reorg). My initial thought was we should just consummate the reorg through NJAssoc. I questioned whether NJCorp, today, could ratify this transaction when it's been out of existence for 2 years. But I don't think that's a problem. After dissolution, NJCorp can still transact business for purposes related to winding down, and we're still within the statutory survival period.
It’s one of the oddest things I’ve seen, brought on because neither the local Township nor the municipality want responsibility to maintain the property and it borders both. In 1785, the US passed the Northwest Land Ordinance which allowed the sale of land in the Northwest Territory. In 1788, John Cleves Symmes bought 311,682 acres of land that led to private development of Cincinnati and neighboring communities, but his purchase literally stops on the opposite bank of the river across from this cemetary. This land falls within the Virginia Military District of the NW Territory, which was reserved for Virginia military veterans who opted to take land instead of be paid for Revolutionary War service. Virginia gave up its grants in 1803 when Ohio became a state, but the validity of land grants were challenged and Ohio statutes rolled over a series of extensions to settle proper ownership in the VMI until 1852, right after this cemetary trust was created. We have no clue who owns it.
You better be paying attention. I'm referring my client to you when he needs to sue his CPA for malpractice.
Just got the worst dashcam of any case I've had in 10+ years practicing law. Suicide by truck, middle-aged Asian lady sprints onto the interstate and directly in front of semi cruising at 65 mph. Blood and brain matter all over the windshield and camera. Poor fucking driver.
I spent a lot of time today researching bile leakage from the cystic duct after a cholecystectomy. That is all.
When I glanced at the TX conversion statute, the one I looked at (I hate hub and spoke) said only that a “statement” was required saying NJ laws were satisfied. Not a certification. Your client made the statement. Even if it was incorrect, the statement was made, no? I admittedly haven’t looked into TX and NJ law beyond glancing at the TX ratification and conversion statutes, but my thinking is that for state law purposes the NJCorp essentially ceased corporate affairs in connection with the purported conversion, at which point the TX corporation came into existence and took over. Without the benefit of research, my focus would be on proving up the corporation’s existence under TX law. Who are you making this argument to? I wouldn’t paper anything saying “F reorg.” I’d leave it open and just say “368” so you’re not pigeon holed. I don’t really do much sub C work anymore (except for when a tax exempt issue crosses into sub C), but memory says there’s another way to obtain tax free treatment in this situation. I can’t recall what the concept is, but I seem to remember there being something else potentially more applicable than 368(a)(1)(F). Point being, don’t get stuck on a particular section of 368 if you have to document this for any reason. How immediate is immediate? I’d think a brief moment (i.e., 1 second) in time satisfies the word “immediate,” so I also wouldn’t lose sleep over this issue. Does it come from the 2015/2016 F reorg regs? Again, I’m not sure what you’re documenting, but if you need to backdate then just use something like “entered into as of May ___, 2023, effective as of April 20, 2020” so there’s no risk of “fraud” w/r/t dates. This also goes to the point I alluded to about “coming clean” in amended articles: verbose recitals in amended and restated articles that explain exactly what happened so the world is deemed to be on notice that a fuck up occurred but everyone acted properly despite the technical foot fault.
My client will be a minority member in a joint venture but may obtain more equity through a complicated arrangement that essentially amounts to what is commonly known as a management fee waiver. Management fee waivers are a private equity technique to convert fee income (taxed at ordinary income rates) into equity whose receipt is tax free and taxable at capital gains rates when it is eventually sold. Essentially, with some magic language and forgoing immediate receipt of the fee, the client gets 13-17% tax savings and tax deferral. The agreement needed to be turned ASAP, so I hastily added the language and hit send on the email. 9 out of 10 times, no one questions or second guesses the tax BS I add to agreements. This time, however, the counterparty brought in outside tax counsel who just so happens to be a partner in what is commonly regarded as the top group of US tax lawyers in the world who “doesn’t understand” (doubtful) the language I added to the JVA, and he wants me to explain it on a call in the morning. Was reviewing my notes and decided to ask ChatGPT to explain some of the language I added to the JVA. Once again, I’m shocked at just how good of a job AI can do at explaining complex concepts that ordinarily take years of learning and more years of practice in order to be able to articulate clearly. As I use AI more and more, I’m starting to wonder how many lawyers it’ll put out of a job and how associates will be able to develop the analytical skills often needed to provide comprehensive legal advice. Shit is wild
If the tax counsel has never seen a deferred management fee slipped into the distribution waterfall then I question is credentials. That's not uncommon at all.
That shit sucks to watch, but I think I broke my brain in my teenage years watching awful shit on the internet so that they weren't quite as traumatic as it probably should have been. My old firm had a case once where a guy was working near some turbine type thing and he got stuck and pulled in head first until his head popped off and the rest of the body dropped to the floor. The video was fuuuuucked up.
The hub-and-spoke approach sucks unless you're really familiar with the statute in question. Off memory, yes, only a statement is required, not a certification. However, TX law says that a conversion must be permitted by the jurisdiction of the converting entity to be effected. I agree we may have an issue saying we continued the affairs of NJ corp after the conversion and, particularly, after the voluntary dissolution. I think it would be better to follow my alternative proposal above, where we say the NJ corp effected the reorg immediately after filing the conversion (rather than saying there was a period of time where the NJ corp operated as an association). Not making an argument to anyone, just preparing resolutions, assignments, and reorg plan for internal purposes so we can explain it in the event of audit or M&A due diligence. Good call on not pigeon holing myself. That said, I'm not 100% sure how else we effect the transaction tax free, without reinstating NJCorp (I don't think we can do) and doing a merger. I'll probably be more generic in case there is an equitable or some other argument available that I'm missing. I can't recall the exact meaning of "immediately." I need to look back at the regs. I think the standard is a little more lax than its literal wording. What you're describing on backdating is probably what I'd do. That's typically how I'd say it. But here with there being requirements that certain actions have taken place at the time of the transaction, I may say that these actions/resolutions were actually agreed to and passed verbally and through course of dealing on the earlier date but is only now being memorialized on paper. In other words, not trying to date now to be effective in the past; rather, saying it was done in the past and we're merely memorializing it on paper now. Maybe not a distinction with a difference here. Just thinking off the cuff.
Yep, I’ve done enough capital murder defense that I can watch some footage of a body that’s been floating in a river for days and be ready to eat lunch after.
Let me tell you about the delayed diagnosis of necrotizing fasciitis in the upper thigh and groin area of an 8 year old girl and the resulting pictures…
Didn’t want to shitpost on the TV board about it, but this seems like the appropriate thread - there’s no way they could write an enforceable contract with the lead character under the purported circumstances of the show, right? Like, there’s no way a TV studio would risk filming an entire season of a show only to have the lead claim fraud in the inducement. Am I missing something?