June’s Lender Edition of Bits & Bytes is Now Available

B&BTake a moment for the new edition of “Bits & Bytes,” as Attorney Deanne Koll explains the two steps to obtaining a security interest in personal property: attachment and perfection.

Click here for a transcript or click here to view previous videos in the Lender Edition series.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

Related Attorneys

Related Services

How Do I Obtain a Security Interest in Personal Property?

B&BTake a moment for “Bits & Bytes,” as Attorney Deanne Koll explains the two steps to obtaining a security interest in personal property: attachment and perfection.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

There are two steps to obtaining a security interest in personal property owned by a debtor: attachment and perfection. Attachment occurs when the debtor grants the security interest to the creditor.

That’s usually completed by the debtor executing a general business security agreement or specific collateral security agreement. A properly executed attachment makes that agreement binding between the debtor and creditor.

Perfection is the second step and is important to preserve your rights against other third party claimants.

Depending on the collateral, perfection may be completed by filing a UCC-1 (sometimes called a financing statement), by having your name on the title (such as listing as a secured party on a car title), or by actually possessing the collateral (such as a stock certificate in a closely-held business).

A properly perfected security interest ensures that your interest in that collateral cannot be leap-frogged by some later creditor. Said another way, if you fail to properly perfect your security interest, a later creditor could lend money to the debtor and sneak in line as a priority interest holder on that collateral.

Perfection (or non-perfection) comes into play once a customer defaults and all of the creditors are getting in line to try to collect against a debtor’s assets. It’s important for a creditor to have a properly perfected security interest in order to preserve its rights to repossess its collateral.

Related Attorneys

Related Services

Register Now for the Summer Edition of Breakfast with Bakke Norman!

Breakfast with Bakke NormanThe Summer Edition of Breakfast with Bakke Norman will be held on Monday, August 31, 2015.

This event will begin with an Employment Law Seminar at WITC – New Richmond Campus, 1019 South Knowles Avenue, followed by a round of golf at the New Richmond Golf Club, 1226 180th Avenue North.

Registration, hot breakfast and networking will begin at 7:30 a.m.;
Presentations and a panel discussion will be held from 8:00 a.m. to 10:00 a.m.; and
Golf tee times will start at 10:45 a.m.

Topics will include:

  • How to prepare, conduct and document employee discipline and terminations;
  • Recent interesting developments in employment law; and
  • How to get sued and how to avoid it.

To register, CLICK HERE, call 715-246-3800 or email Janet King.

A New Business Edition of Bits & Bytes is Now Available.

B&B - Bus Edition (small with cropped line)Take a moment for the new business edition of “Bits & Bytes,” as Attorney Tom Schumacher discusses the different legal structures of a business entity. Click here for a transcript or click here to view previous videos in the Business Edition series.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

 

Related Attorneys

Related Services

Related Resources

Business Succession Planning – Part III

B&B - Bus Edition (small with cropped line)Take a moment for “Bits & Bytes,” as Attorney Tom Schumacher explains succession planning for the owners of a closely held business. This third installment discusses the different legal structures of a business entity.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Business, tax and estate planning law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

If you have successfully operated your business for a number of years, it already has a legal structure. This may vary from a sole proprietorship to multiple related entities owning various aspects of your business. For example, one entity may own the real estate in which the business operates.

A separate entity may be the actual operating entity of the business. Another entity may own specific intellectual property. Each business entity has unique legal and tax aspects which play a role at the time you decide to proceed with a transfer of your business.

Some entities are ignored for income tax purposes such as a sole proprietorship or a single member limited liability company. C Corporations, on the other hand, are separate taxable entities that file their own tax return separate from the return of the owner.

The structure of your business entity will be a key factor when it comes time to transfer your business. Many operating businesses today are organized as corporations or limited liability companies. Most sales of closely held businesses are asset sales and not stock or membership sales.

This means that the third party buyer will buy the assets of your business and not the stock. There are a number of liability and tax reasons for a buyer to acquire assets and not the stock of your corporation. The result of an asset sale is that the proceeds go to your business entity and not to you individually.

Your business entity will pay income taxes on the sale of the assets. Whether or not you can distribute the proceeds from your entity to you without paying additional taxes will depend on the tax structure of your business entity. C Corporations have a double tax, one at the time the assets are sold by the corporation and a second tax when the proceeds are distributed as dividends to you, the owner.

Because of this double tax, many business owners elect to have their company taxed as an S Corporation. This means that the income of the corporation is not taxed to the corporation but, rather, is passed through to the owner who then pays taxes on the income. If you have a C Corporation, early planning may allow you to make an S Corporation election that will save you a considerable amount of tax dollars upon the sale of your business.

Any buyer of your business is going to want to review your business organizational documents, record books and minutes as part of their due diligence process. They will also want to review any significant contracts the business has with third parties. Another area that they will explore is the salaries and benefits of your employees.

It is important to have complete and accurate records regarding your various insurance plans for workers compensation, general liability, health and disability. If you have an employee retirement plan, the buyer will want to review these documents as well. As an owner who is looking at a potential business transfer, all of these records should be organized and up to date.

Business records are critical to any business succession plan. It is never too early to begin to review and organize these records.

Related Attorneys

Related Services

Related Resources