In a recent decision, the United States Bankruptcy Court for the Eastern District of Massachusetts sent a reminder to practitioners and family business owners that it is critical to maintain corporate formalities in order to avoid unintended liabilities. In the case of In re Cameron Construction & Roofing Co., Adv. P. No. 15-1121, 2016 WL 7241337 (Bankr. D. Mass. December 14, 2016), the Bankruptcy Court applied the concept of substantive consolidation and made the assets of a non-bankrupt related entity available to creditors in the bankruptcy proceeding.
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Governance
What Corporate Records do Family Businesses Need to Provide to Their Shareholders?
In family businesses, disputes may arise concerning access to company information. Owners who work day-to-day in the business typically have unfettered access to this information, while passive shareholders may feel they are “in the dark” as to the company’s decision-making and performance. Passive shareholders depend on the “insider” owners to provide them with full and accurate information and may become suspicious of the insider owners when the information provided is delayed or incomplete. For their part, the active owners may believe that information requests from other owners are a burden or a distraction to the company’s operation. So, what documents are corporate shareholders entitled to review?
Continue Reading What Corporate Records do Family Businesses Need to Provide to Their Shareholders?