What duties do officers and directors of a closely held business owe the company’s creditors when the company is failing? Unfortunately, this has become a common question during these troubling economic times. The answer in Wisconsin appears to be bit different than other states at this point if the failing business is still a “going
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The Changing Landscape of Wisconsin Noncompetes
By Robert Sullivan on
Posted in Business Litigation
In Frank D. Gillitzer Electric Co.v. Andersen, a Wisconsin Appellate Court found that a provision in an employment contract that required an employee to repay certain training costs if the employee did not stay with the employer for four years after the training was completed did not violate Wis. Stats. § 103.465. This was …
Further Proof that Noncompete Agreements are Unique
By Robert Sullivan on
Posted in Business Litigation, Noncompete Agreements
The court battle between IBM and Dell over the employment of former IBM M&A chief David Johnson provides even more evidence that Noncompete Agreements are highly unique contracts that often lead to some highly unique arguments in litgation. It appears Mr. Johnson is arguing that because he “intentionally” signed the noncompete on the wrong line…
Kentucky Basketball and Letters of Intent
By Robert Sullivan on
Posted in Business Litigation
The current dispute involving the University of Kentucky and its former men’s basketball coach, Billy Gillispie, is an example of a not so uncommon problem with informal agreements. In general, “agreements to agree” (aka “letters of intent” or “agreements in principle) are not binding contracts under Wisconsin law. Instead, they are tools used to clarify…
Constructive Dividends in Closely Held Businesses
By Robert Sullivan on
Posted in Operating a Business
A constructive dividend generally refers to a situation where the IRS re-characterizes certain corporate “expenses” as dividends thereby excluding certain corporate deductions and increasing the corporation’s tax (along with possible penalties and interest). Examples of disallowed expenses include: (a) unreasonably large salaries; (b) low interest or no interest shareholder loans; and (c) unreasonable rent payments to…
Interplay Between Tradename, Noncompete Agreements and Tort Law
By Robert Sullivan on
In D.L. Anderson’s Lakeside Leisure Co. v. Anderson, 2008 WI 126 (filed 2 Dec. 2008) the Wisconsin Supreme Court addressed the interplay between tradenames, noncompete agreeements, and tort law. Anderson involved an asset purchase agreement whereby Seller agreed to sell certain assets, including seller’s tradename, to buyer and seller agreed to a noncompete agreement with…