The following are just a few of the relationships that businesses need to manage:

1. Landlord – tenant
2. Lender – borrower
3. Equipment lessor – lessee
4. Creditor – debtor – guarantor
5. Vendor/service provider – customer
6. Corporation (or LLC) – shareholder (or member)
7. Customer – general contractor – subcontractor

In each relationship, even a temporary delay in payment or performance could breach a contract and destroy a relationship.  While the judiciary system has limited physical access to their courthouses due to the coronavirus pandemic, the courts are very much “open” for business.  Lawsuits are being filed, and judgments are being entered, sometimes more aggressively than before as creditors, themselves, encounter liquidity problems.

Our attorneys have the expertise and decades of experience necessary to navigate the minefield of creditor and debtor rights.

Whether your business cannot make an upcoming rent payment, or risks the repossession of its equipment, or cannot satisfy a contractual obligation – due to circumstances beyond your control – we can help.  If you signed a personal guaranty, we can protect your assets, stop a bank levy and shield your home from a sheriff sale.

In situations where you need to do more with less, such as deciding whom to pay, or where to direct your personnel and resources, we can guide your next move so that you can confidently get the job done and protect and grow your business.

If a customer soon will default, or has defaulted, on a payment owed to you, we can enforce your rights and aggressively pursue collection.  Through our partnerships, we can locate assets and get you paid.

By taking proactive steps, we can prepare your Consultations available by video conference. business for the uncertain future that lies ahead.

Your challenges await our solutions.  We welcome your call or e-mail.  Consultations are available by video conference.  To schedule a consultation, please call (973) 845-6525 or e-mail bspector@selawfirm.com.

In New Jersey, your power as a shareholder to control the governance of a corporation is based on your voting rights, which can be determined by reviewing the incorporation documents (namely, your certificate of incorporation and the by-laws).

Because New Jersey allows corporations to customize the relative rights, preferences and limitations of the shares of each class of stock issued by a corporation, just because you own 50% of the stock of a company does not mean that you have 50% of the voting rights.  You could own 50% of the stock and have no voting rights.  Similarly, you could own less than 50% of the stock and have a majority of the voting rights.

Also note that shareholders simply vote for a board of directors, who then make decisions regarding the governance of the corporation.  As such, even if you have a majority of the voting rights, the structure of the corporation’s board of directors could be set up to deny you complete control over the governance of the corporation.

Spector & Ehrenworth, P.C. has extensive experience analyzing and advising shareholders regarding their rights with respect to the governance of corporations.  Attorneys at the firm would be happy to discuss with you the specifics of your corporation and advise you with respect to your rights.  To schedule an appointment to speak with a business attorney, call (973) 845-6525 or e-mail info@selawfirm.com.

There are many factors that you must consider before attempting to sell your minority interest in a New Jersey LLC.  First, you must determine whether the operating agreement places any limitations on your ability to transfer your interest. The operating agreement is the agreement between the members that addresses, among other things, the relations among the members.  Commonly, an operating agreement will contain a section that addresses whether the members may sell their interest to a third party and, if so, the circumstances under which such a sale may take place.  For example, some operating agreements require that the member that seeks to sell their interest must first offer the interest to the remaining members for a set price or for fair market value.  Because each operating agreement is different, it is essential that you review your operating agreement and determine your rights if you are considering selling your minority interest in a New Jersey LLC.

In the event that the operating agreement permits you to sell your minority interest, it is important to determine how much your interest is worth.  In most cases, it would be beneficial to obtain a valuation of the interest by an independent business appraiser.  The appraiser will perform an analysis of the company as well as an analysis of what your minority interest is worth.  This is not as simple as multiplying your percentage of ownership by the fair market value of the company.  In other words, if you own a 20% interest in a company that is worth $500,000, your interest is not necessarily worth $100,000.  Because, as a minority member, you cannot control how the company is run, an appraiser will likely apply what is a called a “minority discount,” which could result in a discount of more than 35% of the value of the minority interest.  Using the above example, if a 35% minority discount is applied to the 20% interest, your minority interest could be reduced to $65,000.

It is important to understand what rights you have to sell your minority membership interest in a New Jersey LLC.  Spector & Ehrenworth, P.C. has extensive experience representing clients in the sale of their membership interest and working with business appraisers to accurately appraise the interest prior to sale.  Attorneys at the firm would be happy to discuss with you the specifics of your limited liability company and advise you with respect to your desire to sell your interest.  To schedule an appointment to speak with a business attorney, call (973) 845-6525 or e-mail info@selawfirm.com.

The short answer is that New Jersey law does not require you to have an operating agreement to form an LLC, but you should have one anyway (and it should be in writing).  New Jersey LLCs are governed by the Revised Uniform Limited Liability Company Act (N.J.S.A. 42:2C-1, et seq.).  If you do not have a written operating agreement, one may be “implied” based on oral communications between the members and/or the course of conduct.  Additionally, in the absence of any operating agreement – either written or implied – the rights of the members will be determined by the default provisions set forth in the Revised Uniform Limited Liability Company Act.

To prevent confusion, uncertainty and a potential dispute regarding the rights and duties of the members, it is always advisable when forming a New Jersey LLC for the members to sign a written operating agreement.  A proper operating agreement will address, among other things:

1. relations among the members and between the members and the limited liability company;
2. the rights and duties of the manager;
3. the activities of the company and the conduct of those activities; and
4. the means and conditions for amending the operating agreement.

Spector & Ehrenworth, P.C. has extensive experience assisting clients in preparing operating agreements for their limited liability companies that set forth precisely how the members would like the limited liability company to be governed.  Attorneys at the firm would be happy to discuss with you the specifics of your limited liability company and advise you with respect to the preparation of your operating agreement.  To schedule an appointment to speak with a business attorney, call (973) 845-6525 or e-mail info@selawfirm.com.

The specific laws that govern your business dispute depend on the type of business (namely, whether the business is a partnership, a limited liability company, or a corporation) and the nature of the dispute.

In New Jersey, partnerships are governed by the New Jersey Uniform Partnership Act (N.J.S.A. 42:1A-1, et seq.); limited liability companies are governed by the New Jersey Revised Uniform Limited Liability Company Act (N.J.S.A. 42:2C-1, et seq.); and corporations are governed by New Jersey Business Corporation Act (N.J.S.A. 14A:1-1).

Additionally, depending on the type of dispute (such as breach of contract or breach of fiduciary duty) there are “common law” standards that have been developed by the New Jersey Courts through decisions rendered in connection with past lawsuits.

Spector & Ehrenworth, P.C. has extensive experience analyzing and advising clients on which laws govern different New Jersey business disputes.  If you are involved in a business dispute, attorneys at the firm would be happy to discuss with you the specifics of your case and advise you with respect to your legal options.  To schedule an appointment to speak with a business attorney, call (973) 845-6525 or e-mail info@selawfirm.com.