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Craig Volney Butler

Craig Butler’s Answers

3 total

  • Fiduciary duty question - Can a corporation re-prioritize old debt (8 years old) if all noteholders have same agreement?

    This is a securities law question. I operate a defunct Nevada C corporation. The corporation has approx $900K in debt from about 15 different noteholders. Those lenders are individuals who lent money based on the same terms. The loans included a p...

    Craig’s Answer

    I agree with the first response about the necessity of getting legal advice prior to taking any action. In general terms, based on the information your provided:

    1. If the notes say all noteholders will be treated equally and repayments will be made pro rata, then the corporation cannot unilaterally, by resolution or otherwise, change the terms and pay certain noteholders and not other noteholders without being in breach of the note agreements of the holders that are not being paid off. There would be the possibility of changing the repayment terms but it would need to be done with the involvement of all the noteholders by amending the notes, if that is possible.

    2. This is a difficult question to answer without knowing more facts, but someone would obviously have to do some work for the corporation in order for the judgment to be collected and the payments to made to the noteholders per their notes. Whether that person can get reasonable compensation for their services, etc. is difficult to say without more information as the note agreements may speak to this situation in the notes themselves.

    3. Based on the facts you laid out, it would problematic for any "distributions" to be made while there are outstanding debt obligations. Not only might there be something in NV law that would prohibit such distributions, there is likely something in the notes as well (especially since the notes evidently state the notes have priority over any distributions to equity holders or staff.

    Again, I would seek counsel before taking any action to have them review the notes and discuss the situation before taking any action to pay someone a administrative fee or pay anyone a distribution.

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  • Can I do business under a name other than my true legal name?

    I am starting an LLC. I wish to do business under a name other than my true legal name. Not for any reason other than I do not prefer my first name. Do I need to file a DBA in order to do business under another name? example legal name jane Kel...

    Craig’s Answer

    I think you are off to the right start in looking to form a legal entity at the outset of your business (an LLC or a corporation) for liability and potential tax benefits. Once you determine the proper legal entity type then you can choose a name for that entity (such as Kelly Smith Designs, LLC). If your business operates under that name (Kelly Smith Designs, LLC) then you won't need a dba for you or your business. However, if you want to use another name for your business then your business entity (LLC or corp) will need to file for a dba to use that different name. You individually would not file for dba in this instance, the legal entity you created would. So while you are deciding on a name for your business entity (LLC or corp) there are a number of things to keep in mind in addition to name availability with the state, such as making sure there aren't any trademarks held by others, availability of domain names for your internet presence, etc. Best of luck to you in your new venture!

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  • How much time does it take to draft, file and get Form S-1 approved by the regulator? Is Form 10 reg better for OTC listing?

    We are looking to file Form S-1 / Form 10. We need to discuss the possibilities with the securities lawyer for drafting & filing Form S1.

    Craig’s Answer

    Typically an S-1 Registration Statement takes a few weeks to draft (but the necessary audit will many times be the gating item as it will normally take longer to complete) and then a normal S-1 comment process with the SEC takes 3-4 months. But many factors can affect this and extend this time, such as quality of the filing, accounting/audit issues, industry segment of the company, etc. A Form 10 can take just as long, but since the company automatically becomes a reporting company under the '34 Act it may find itself filing 10-Ks and 10-Qs at the same time it is responding to SEC comments on the Form 10, which can be problematic. But again, many factors could change this timing. Also, whether the company is better off filing an S-1 or a Form 10 is dependent on many factors as well. But I agree with a prior answer that many times the S-1 is the better route so the company can register existing shareholder shares for resale in the S-1 and have registered shares ready for sale for the 211 process with FINRA.

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