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Update on Fintech, Social Entrepreneurship and Special Purpose National Bank Charters for Fintech Companies.

January 19, 2017 1 comment

Last month, Thomas J. Curry, Comptroller of the Currency gave remarks about Special Purpose National Bank Charters for Fintech Companies. You can read Mr. Curry’s remarks here.

Mr. Curry announced that the Comptroller of the Currency (OCC) would move forward with considering applications from financial technology (fintech) companies to become special purpose national banks.

Mr. Curry had this to say, in part:2015-11-26-13-04-02

“Over the past year, no topic in banking and finance has drawn more interest than innovative financial technology, and for good reason. The number of fintech companies in the United States and United Kingdom has ballooned to more than 4,000, and in just five years investment in this sector has grown from $1.8 billion to $24 billion worldwide.

“The OCC published a paper discussing the issues and conditions that
the agency will consider in granting special purpose national bank charters.” You can check that paper out here

Support for Special Purpose National Banks from the Fintech Community.

Today I read an article from CrowdFund Insider: Financial Innovation Now supports the OCC’s charter.

Financial Innovation Now is “a public policy coalition comprised of Amazon, Apple, Google, Intuit and PayPal”

Some heavy hitters.

As reported by Crowdfund Insider, Brian Peters, Executive Director of Financial Innovation Now, stated;

“FIN believes that payments and lending regulation needs streamlining for the modern era. We commend the
OCC’s leadership and vision in driving this regulatory discussion. The OCC has rightly concluded that its approach must evolve to ensure that all American consumers and small businesses are empowered with better access to the benefits of financial technology.”

According to Crowdfund Insider  “Fintech Charter could benefit innovative financial firms that can provide superior services at a lower cost for both consumers and businesses.”

Why Fintech Intrigues me – Purpose Driven.

I’ve previously talked about why fintech is so intriguing.

a. taking a risk doing something different;

b. disrupting business as usual;

c. for the good of others.

That’s social entrepreneurship at its finest.

Given the hot water that big banks continue to find themselves in, it isn’t surprising that a consumer friendly alternative is attractive.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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A “Fierce Urgency.”​ Reflections on Community Development/Affordable Housing.

January 18, 2017 Leave a comment

“We are now faced with the fact that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history, there “is” such a thing as being too late. This is no time for apathy or complacency. This is a time for vigorous and positive action.” – Martin Luther King Jr.

Yesterday, I took a picture of this quote from Dr. King, on the overhead of the Grand Rapids Urban League’s 17th Annual Corporate Breakfast in honor of Dr. Martinimg_1373 Luther King Jr.

In light of Dr. King’s quote, Co-Executive Director of LINC UP Darel Ross II spoke eloquently and boldly on the topic of Housing and Community Development.`

Grand Rapids has an Affordable Housing Crisis.

This Fall the Grand Rapids Chamber of Commerce hosted an Issue Summit on the topic of the Affordable Housing Crisis in Grand Rapids.

The Summit brought speakers representing many community stakeholders, including representatives from 616 DevelopmentGrand Rapids Urban League,Rockford ConstructionICCFMSHDA, and many local non-profits, including Mel Trotter MinistriesHQHeartside Ministries, on this lack of affordable housing, what is as Mayor Bliss emphasized, admittedly, “a complex issue”.

I have previously offered my own perspective, both as a lawyer representing real estate developers/investors, and as Board Chairman at Mel Trotter Ministries.

All people are valuable – made in the image of God.

There are people who are hurting in our local community.

Dr. King’s quote is applicable to us, today.

There is a “fierce urgency for now.”

What Mel Trotter Ministries is doing.

In 2016 Mel Trotter Ministries helped 216 families and individuals find permanent housing.

There is still much work to be done.

There are still a significant number of hurting families who need housing in Grand Rapids, alone.

It requires action on our part.

The easy route is apathy and complacence.

Take action.

I invite anyone reading this to join me for lunch sometime and learn what we at Mel Trotter Ministries, in collaboration with so many others, are doing to end homelessness.

e-mail: Jeshua@dwlawpc.com

 

Twitter: @JeshuaTLauka

Encountering the homeless in Downtown Grand Rapids and Mel Trotter’s Season of Hope.

September 20, 2016 Leave a comment

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Occasionally when I am walking in downtown Grand Rapids I will run into a guy with dirty clothes, smelling bad, looking homeless. When this guy asks me for money, my gut reaction is to want to help. Honestly though, oftentimes I have no idea what is the right response. I will invariably pray for them, but I’m faced with the hard decision:

  • do I give them money?

 

  • do I buy them food?

 

  • do I simply direct them to Mel Trotter?

 

“Giving to those in need what they could be gaining from their own initiative may well be the kindest way to destroy people.”

This is a quote from Bob Lupton, from his book Toxic Charity.
Join me in hearing what Bob Lupton has to say on these issues and more.
On Wednesday October 12, 2016 Mel Trotter Ministries will host its 2nd Annual Season of Hope Event at the Frederik Meijer Gardens with Bob Lupton as our guest speaker.
We are still looking for corporate sponsors. Tickets are available here

 

Thank you to our Honorary Leadership Committee!

Committee Chair: Greg & Meg Willit
Rick & Peg Breon
Gordon & Karla Oosting
Rick & Melissa DeVos
Janis Petrini
James & Nancy Engen
Jerry & Marcia Tubergen
Kenneth Graham & Linda Vos-Graham
Carol & David Van Andel
Tom & Marcia Haas
Harold & Lori Voorhees, Jr.
Cate & Sid Jansma, Jr.
Larry & Lisa Walt

E-mail: Jeshua@dwlawpc.com
http://www.dwlawpc.com
Twitter: @JeshuaTLauka

Prince Died Without a Will. Business Owners: who are your advisors?

CNN just posted an update on the Prince Estate dispute: possible heirs narrowed down to six @CNN https://t.co/imje7PyaqR

A while back I posted about some lessons from Robin Williams’ Estate.

I wrote about Robin Williams’ Estate as “an example of the problems that can erupt after a loved one passes away – even if that loved one had a well thought out estate plan.”

In the case with Prince, it appears that he had absolutely no estate plan at all.

This is surprising given, as the ABAJournal put it Prince apparently “had a ‘revolving circle’ of lawyers and business advisers, according to the New York Times. He also handled many of his business affairs himself.”

I wonder where were the attorneys, accountants, financial advisers telling prince:put your affairs in order!

Maybe this happened. Maybe he had one or more lawyers over the years tell him, “by the way, Prince, you really need to prepare an estate plan so that your finances are in order when you die.”

Maybe estate planning was simply not important to him. According to the article Prince did not have a surviving spouse or parents… one can only speculate.

Prince is apparently survived by 5 siblings. It will be interesting to see if they can all agree on the estate administration or if there are any other apparent heirs that claim a part of the quarter of a billion dollar empire Prince left behind.

Two comments:

1. To business advisers: If we aren’t being proactive with our clients to push them to get their affairs in order, we are doing a disservice. This is especially true when we serve business owners or individuals whose finances might have a lot of moving parts.

2. To Business Owners: Who are your advisers? Maybe you are like Prince – you like to handle many of your business affairs yourself. That only works so well. You can’t be an expert in every area. Surround yourself with good counsel. You need advisers who can steer you in the right direction.

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

http://www.dwlawpc.com

B-Corporations and the Rise of Social Entrepreneurship

May 25, 2016 1 comment

 

A few months back I sat on a panel to discuss Non-Profit Sustainability and Social Entrepreneurship. You can check out the video here.

I was asked to provide some comments on B Corps – or Benefit Corporations.

To cover some basics –

B-Corps have a dual purpose –

  1. To create profit and
  2. “create a material positive impact on society and the environment”

B-Corps also impose heightened fiduciary duties on board of directors, require the Board to consider social/environmental consequences for board decisions.

These “heightened fiduciary duties”  is contrasted with the setting of the traditional corporation – where the shareholders appoint the board of directors who make decisions  to maximize profits to the shareholders.

 

History of B-Corps:

Maryland was the first state to enact B Corp legislation in 2010.

In 2012 – there were 7 states with B Corp legislation enacted.

Today: 31 states (and counting) with B Corp legislation enacted.

Michigan is still not one of those states.

To me, this increase in number of B Corp states acknowledges that millennials and others joining the work force today want to be part of business that does social good.

A question that Michigan legislators must be wrestling with – do we join the trend? Or could allowing for B-Corp formation/conversion, cause a detriment to existing business?

If there is data on that point, I haven’t seen it.

 

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

City of Lansing Settlement Agreement and a Non-Disparagement Clause with a $10k Penalty

I read an article a few days ago about the City Lansing’s Mayor, Virg Bernero and a settlement agreement he apparently negotiated that included a payout that was made, as reported by the Free Press,  “so everybody would be happy.”

What I found interesting was “the settlement agreement signed by Bernero and McIntyre also includes a non-disparagement clause with $10,000 penalties for any comments either side makes harming the reputation and goodwill of the other.”

Would you sign a non-disparagement clause with that big of penalty attached to it?

I’ve previously delved into the topic of non-disparagement clauses.

The above language interests me because the $10,000 penalty is a pretty big stick to deter “disparagement”.  As a lawyer, if I was approving my client’s signature on that agreement, I’d want to be sure that my client understood what constitutes “disparagement” (in the City of Lansing case, the client was a lawyer – and (in my opinion appropriately) responded to inquiries from the press with a “no comment“).

Courts have held that “disparagement” is plain in its meaning. It is not ambiguous. Therefore, when signing a non-disparagement clause you can have some reasonable certainty in your conduct.

For a further discussion on this topic – see below.

1. Non-Disparagement Clauses in Settlement Agreements.

Often times as part of a confidential settlement agreement, the parties to a dispute will agree not to “disparage” each other.

Disparage – as you will see below – has a fairly common meaning.

‘Disparagement’ is ‘a false and injurious statement that discredits or detracts from the reputation of another’s property, product, or business.’ Black’s Law Dictionary (7th ed. 1999).

stated another way:

(1) To speak of in a slighting or disrespectful way; belittle. (2) To reduce esteem or rank.’ . . . American Heritage Dictionary (4th Ed. 2000)

2. Michigan Case Law Concerning “Non-Disparagement Agreements”

Rarely have I ever seen a non-disparagement clause become an issue. In fact, a review of Michigan case law supports this – I found only a handful of cases in Michigan where the parties litigated over one party’s alleged “disparagement” after a settlement agreement was entered.

One such case was the 2011 case of Sohal v. Mich. State Univ. Bd. of Trs. & Davoren Chick M.D., 2011 Mich. App. LEXIS 915, *12-14, 2011 WL 1879728 (Mich. Ct. App. May 17, 2011).

There, Plaintiff,  a participant in MSU’s internal medicine residency program, entered into a “resignation and settlement agreement” with MSU under disputed circumstances. The Agreement contained a “non-disparagement clause”.

Plaintiff sued and argued that Defendants breached the non-disparagement clause, entitling him to “rescind” the Agreement (and therefore sue under all of the laws that he would have otherwise waived).

One of Plaintiff’s arguments was: “the word “non-disparagement” is ambiguous. (If you’ve read my previous post you can understand why this argument does not win the day.)

The Court was not convinced. It held:

“the term “disparage” in the non-disparagement clause is not ambiguous. While plaintiff attempts to ascribe several “reasonable” meanings to the term “disparage,” and thus the non-disparagement clause, the term fairly admits of but one interpretation.” Citing Meagher v Wayne State Univ, 222 Mich App 700, 722; 565 NW2d 401 (1997).

As the Court noted, “Other state courts have determined that the term “disparage” in non-disparagement clauses of settlement agreements are unambiguous.” (citations omitted).

In closing – non-disparagement clauses are standard clauses (but not universally used). Courts have consistently held that “Disparage” is a plainly understood term. It isn’t an ambiguous term.

Questions?  Comments?

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

Twitter: @JeshuaTLauka

Categories: Uncategorized

Startups – Don’t Make this Mistake!

May 13, 2016 1 comment

Happy Friday!

A few months back I wrote a post titled Business Startups: Don’t make these mistakes.

I discussed a recent case that highlighted mistakes that business startups can make – including, shutting down a business, then starting a new one just to avoid debts/creditors.

Generally speaking, that doesn’t work!

A May 3rd Cour of appeals decision reiterates this point – and it provides a good explanation of the legal doctrine that holds a successor business entity “liable” for the debts of its predecessor company – we call this legal doctrine the “mere continuation” doctrine.

You can check out the case of Commonwealth Land Title Insurance Co v Metro Title Corp and Metro Equity Services

I. Facts

  • plaintiff filed a lawsuit against Metro Title and Metro Equity Services, asserting that
  • (1) Metro Title formed Metro Equity for the purpose of fraudulently transferring their assets to avoid collection on the  May 2012 default judgment, and
  • (2) Metro Equity was liable for the judgment as a mere continuation of Metro Title under a successor-liability theory.
  • Metro Equity acknowledged that its owner was the owner of Metro Title and Metro Equity, it argued that Metro Equity was not a mere continuation of Metro Title because Metro Equity did not engage in the same business or customer base as Metro Title and Metro Equity did not purchase any of Metro Title’s stock or liabilities.
  • The Trial Court held that Metro was a mere continuation and found it liable. The Court of Appeals affirmed.

II. “MERE CONTINUATION”

The Court stated the law:

“Michigan follows the traditional rule of successor liability. Foster [v Cone-Blanchard Machine Co], 460 Mich [696] at 702[; 597 NW2d 506 (1999)]. Under that rule, the nature of the transaction determines the potential liability of predecessor and successor corporations. Id. “If the acquisition is accomplished by merger, with shares of stock serving as consideration, the successor generally assumes all its predecessor’s liabilities. However, where the purchase is accomplished by an exchange of cash for assets, the successor is not liable for its predecessor’s liabilities unless one of five narrow exceptions applies.” Id. The five exceptions are: (1) an express or implied assumption of liability; (2) de facto -3- consolidation or merger; (3) fraud; (4) transfer lacking in good faith or consideration; or (5) where the transferee corporation was a mere continuation or reincarnation of the old corporation. Id. at 702.”

The Court held that the mere continuation doctrine was applicable in commercial transactions such as this one – and affirmed the trial court’s ruling finding successor liability.

Lesson:

Start up businesses – take advantage of your limited liability protection, but do not think you can avoid your debts simply by starting up a new business entity that is a mere continuation of one you dissolved.

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

twitter: @JeshuaTLauka