Shulman Hodges & Bastian LLP

July 2014 Archives

Bankruptcy judge, creditors approve liquidation of Fisker assets

Rechargeable hybrid vehicles are gradually becoming more visible on roads in California and throughout the country, and most of the major car manufacturers have indicated their intention of competing in the luxury hybrid market. One of the first companies to enter that market was Anaheim-based Fisker Automotive.

Avoiding conflict-of-law disputes with choice-of-law provisions

Business agreements between companies operating in different jurisdictions often have "choice of law" provisions that govern which jurisdiction's laws will apply to the business relationship. If a dispute arises, then a choice-of-law provision usually resolves the issue of which law is to be applied to address any issue or dispute. We touched on a slightly related matter in our previous post on choosing the appropriate state in which to form your business.

Aecom-URS merger to make largest company in LA city limits

A merger expected to close in October will make Los Angeles-based Aecom Technology Corp. the second-largest construction and engineering firm in the United States and one of the largest in the world. Aecom -- whose projects include the new World Trade Center in New York, stadiums for the most recent World Cup championship, and the design of the new headquarters for the Los Angeles Police Department -- will merge with San Francisco-based URS Corp. The latter was responsible for a number of projects in Southern California -- for example, the 22 Freeway, several community colleges and the UCLA Ronald Reagan Medical Center. URS is also a major player in the energy industry, which reportedly made up about 40 percent of the company's revenue in 2013.

IBM and Apple to partner in selling mobile apps to businesses

In 2005 IBM stepped away from the consumer products market to focus on business customers. The move came after years of trying to compete with Apple, which of course has dominated the consumer market with iPhones and iPads. The rivalry between the two companies dates back to when personal computers first became available, so in a way the recent announcement of the business' partnering up was a bit of a surprise.

The Trust Fund Doctrine - Choose Your State of Incorporation or Formation Wisely

In the excitement of starting a new business, many California small business owners give little thought to the state they choose for incorporation or the formation of a LLC. As a result, they opt for California as the logical choice. But with the majority of small businesses failing shortly after they open their doors, a basic understanding of California's trust fund doctrine should cause a business person to pause before incorporating or forming a LLC in California, since the ramifications down the road can be profound.


The California Court of Appeal recently issued a decision in Wells Fargo Bank v. Weinberg, 2014 Westlaw 2762068 (Cal. App.). There, a corporation (in this case a law firm comprised of only one attorney) needed money which it ultimately borrowed from a bank. Although the attorney personally guaranteed the debt, there was apparently no writing evidencing the guaranty.

BAP Upholds Bankruptcy Court Decision to Reject a Lease Retroactively Where Subtenant Had Not Vacated Premises

In an unpublished opinion filed on May 30, 2014 in the case of Boyle Avenue Properties v. New Meatco Provisions, LLC, et. al., the Ninth Circuit BAP upheld the Bankruptcy Court's decision and found that a lease could be rejected retroactively to the date of the filing of the motion to reject the lease instead of the date of entry of an order rejecting the lease, even where the leased space had not been vacated by the debtor's subtenant. The Bankruptcy Court found that the Debtor met the 4 part test for "exceptional circumstances" as set forth in In re At Home Corp., 392 F.3d 1064 (9th Cir. 2004) to allow retroactive rejection of a lease. The Bankruptcy Court focused on the third factor of whether a debtor has vacated the premises or is receiving a benefit from the premises in meeting the "exceptional circumstances" test. In cases where the debtor's subtenant had not vacated the premises and was past due on rent, the Bankruptcy Court found, and the BAP affirmed, that because the debtor had vacated and because the subtenant was not paying rent, the debtor was not receiving a benefit from the premises. Therefore, the lease could be rejected retroactively to the date of the filing of the motion to reject the lease.


The District Court for the District of Nebraska recently upheld the application of a constructive trust as a means to shield payments made by a bailee-debtor from avoidance as a preferential transfer. In re Big Drive Cattle, L.L.C. v. Overcash, 2014 U.S. Dist. LEXIS 80853 (D. Neb. June 13, 2014). In In re Big Drive Cattle, a rancher shipped cattle to a commercial feedlot. The feedlot would keep the cattle for feeding and care until they reached the appropriate weight, at which point they were sold to third parties on the rancher's behalf. The feedlot then, without the rancher's consent, deposited the proceeds from the sale of the cattle with one of its lenders. The lender applied the deposited proceeds against the feedlot's debt. Thereafter, the feedlot paid an equivalent amount of the cattle-proceeds, minus the cost of feed, to the rancher. The feedlot filed for bankruptcy under Chapter 11 on September 9, 2011, and the trustee sought to avoid the payments made to rancher, one year preceding the bankruptcy filing, as a preferential transfer.

TRI Pointe's 'transformative transaction' takes firm to Top 10

A fairly recent entry into Southern California's homebuilding network has forged a deal with Weyerhaeuser Co. that increases its annual sales volume sevenfold. Builder Magazine reports that TRI Pointe Homes Inc., based in Irvine, is now one of the country's top 15 homebuilders in sales volume and top 10 in stock value. That is impressive growth for a company that opened its doors just five years ago.

Amazon remains at loggerheads with Hachette and now Time Warner

Anyone who has been following business news may have heard that Amazon and the publishing company Hachette have been fighting over whether to make the publishing company's books available for preorder. While Amazon is currently refusing to allow consumers to order the books before their release date, there are also reports that this is part of a larger contract dispute between the two companies.

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