News

The Privacy Shield Protects

July 12th, 2016 By Virtual Paralegal Services

Just as Captain America’s shield protects him from bullets and flying debris, a privacy shield provides protection to personal and sensitive data. Data protection is a difficult task, especially when data is being transferred. If a company does not have the proper mechanism in place, trouble can ensue. For example, when dealing with transfers from Europe (EU) to the U.S. (US), data protection can be tricky. Up until recently, the “gold standard” transfer mechanism to move data was the Safe Harbor framework, but only a handful of US. companies have used it.  Why? It was costly and required that a company certify annually that it complied with certain privacy principles consistent with European law.

On October 6, 2015, the European Court of Justice issued a judgment declaring invalid the European Commission’s July 26, 2000 decision on the legal adequacy of Safe Harbor.  The European Court of Justice has ruled that the “safe harbor” agreement that allowed the transfer of European citizens’ data to the US. is no longer valid. This caused many companies to panic especially if they were using the Safe Harbor framework.  Companies needed to look for other mechanisms to transfer data out of the EU to the US.  Model clauses, binding corporate rules and other options were available to use, however given that the gold standard was struck down, there was no guarantee that these methods would not also be challenged.

Enter the Privacy Shield

It took six months, and on February 29, 2016, the Department of Commerce and the European Commission publicly released the EU-US Privacy Shield Framework. This framework, which replaces the Safe Harbor program, provides a legal mechanism for companies to transfer personal data from the EU to the US. It will be enforced by the Federal Trade Commission (FTC). The Privacy Shield is designed to provide companies on both sides of the Atlantic with a method to comply with the EU data protection requirements when transferring personal data from the EU to US in support of transatlantic commerce.

What are the requirements for a company to use the Privacy Shield?

  • U.S.-based company
  • Required to self-certify to Department of Commerce
  • Publicize commitment to adhere to the Privacy Shield Principals
  • Must publicly disclose Privacy Policy
  • Must actually implement the principles
  • Must provide a detailed description of activities involving EU residents’ personal data and its related privacy policies.
  • Must be signed by a corporate officer
  • Make arbitration available for disputes
  • All data subjects must be provided with a declaration of the company’s participation in the Privacy Shield program, a statement of right of access to their personal data, and the identification of the arbitration forum for disputes.

Under the Privacy Shield, companies are still committed to the highest level of protection of the data they collect, handle and transfer. They want the best for their customers, consumers, clients, vendors and employees.

There are six key principles that any company which handles personal data should adhere to whether or not they transfer data from the EU to the US. They are:

  1. Inform individuals on how their data is collect, shared and stored – through the Privacy Notice/Privacy Policy
  2. Only collect what is absolutely necessary for business purposes and allowed by law
  3. Ensure accountability for how data is transferred and handled
  4. Be transparent with actions and stick to privacy commitments made to consumers, customers, clients, vendors and employees
  5. Cooperate with enforcement agencies
  6. Keep good records

For more information about complying with these new rules, please contact Virtual Paralegal Services.

 

The Pros and Cons of a Cayman LLC

July 8th, 2016 By Virtual Paralegal Services

Note: This is the last in the series about Cayman LLCs.

Like Delaware LLCs, a Cayman LLC is a corporate body with a legal status that is separate from its members. Unlike the Cayman Islands exempted limited partnership, the Cayman LLC structure offers members some protection from personal liability.

The members of the LLC have substantial authority to set the internal rules and structure of the business. Cayman LLCs can be managed by one member, a group of members, all the members together, or by a non-member designated to act on behalf of the business. Managers are restricted by the Duty of Care, but are otherwise free to pursue the goals of the LLC in the ways they see fit. Cayman Islands law does not even require these businesses to file their LLC agreements with the Registrar of Companies.

Members of a Cayman LLC have greater flexibility to handle the profits or losses of the business. The absence of shares or share capital funds means members can distribute the proceeds of the business based on internal contractual arrangements. This makes managing a Cayman LLC a much simpler task than overseeing a Cayman exempted company.

In short, Cayman LLCs approach the flexibility of a Cayman exempted limited partnership, while maintaining the liability shield and legal status of a Cayman exempted company.

The drawbacks of the Cayman LLC

There are few drawbacks to the Cayman LLC that are not also true of other offshore arrangements. For people who have never before participated in offshore business ventures, the fees and reporting requirements of the Internal Revenue Service may come as a surprise. For clients who already use Cayman partnerships or exempted companies, there should be no surprises in forming an LLC.

Unlike Delaware LLCs, there is no similar provision in the Bill to create Series LLCs. The Cayman Islands already has a legal entity known as a Segregated Portfolio Company that serves a similar business purpose to the Series LLC. It is unclear if the Cayman LLC will eventually copy the Delaware LLC in incorporating a series arrangement.

If you need additional assistance when it comes to Cayman LLCs, please contact us. We can help.

How to Convert to or Create a Cayman, LLC

July 5th, 2016 By Virtual Paralegal Services

The benefits of the Cayman LLC are likely to inspire jealousy among a few of the current owners of Cayman exempted companies. The Limited Liability Companies Bill of 2015 contains a provision, Part 10, Clause 56, that is designed to manage these situations. The Bill outlines the process for exempted companies to convert into limited liability companies. Exempted companies are required to pass a special resolution calling for re-registration as an LLC. They must file an application and pay the necessary LLC registration fee. Once approved, the business will be regarded under law as an LLC, and will be bound by the terms of the LLC operating agreement. Conversion is reasonably straightforward and should not be considered an obstacle for exempted companies looking for greater flexibility.

The Bill contains no similar provision for conversion of exempted limited partnerships to LLCs. The separate status of the LLC requires partnerships to form completely new legal entities. Members of an existing partnership face higher burdens involving the termination of that partnership before they can reorganize as an LLC.

The Basics of Cayman LLC Formation

In its most basic form, a Cayman LLC is easy to create. As long as the business meets basic qualifications and is formed for a legal purpose, the LLC will be created by following these steps:

  • Pay the necessary registration fee to the Registrar.
  • File a registration statement with the Registrar, signed by or on behalf of any person forming the company.
  • Deliver a copy of the registration statement, or submit one by permitted electronic means, in duplicate to the Registrar.
  • The registration statement itself must contain several elements:
  • The name of the LLC and its dual foreign name and translated name, if it has one.
  • The Cayman Islands address of the LLC’s registered office (necessary for the service of process and the receipt of notices and communications under Cayman Islands law).
  • The term for which the LLC is formed, if it is not intended to last an unlimited duration.
  • A declaration that the LLC will not do business with the public on the Cayman Islands, beyond that which is necessary for the LLC to do business outside the Islands.

After completing the simple steps outlined above, the Registrar should issue a certificate of registration acknowledging the date of filing. That certificate operates as proof, under Cayman Islands law, that the LLC has been properly formed and registered.

There are a number of requirements necessary to maintain the LLC after its initial formation. The filing of a yearly return, the payment of ongoing fees and the maintenance of an accurate register of members are just a few of the duties listed to maintain the LLC in good standing.

If you’d like assistance, please contact Virtual Paralegal Services.

 

Working Together: Cayman LLC and Delaware LLC

July 1st, 2016 By Virtual Paralegal Services

As with any new entity, the Cayman Islands LLC will inspire curiosity and uncertainty in the business community. There is ample reason for optimism, however, based on similar entities and on the reputation of the Cayman Islands for fostering a climate favorable to offshore businesses.

Similar and compatible

Perhaps the most reassuring aspect of the Cayman LLC is its similarity and compatibility with a known entity, the Delaware LLC.

The Delaware LLC is well known in the legal field. What are also well known are the advantages that come with this choice of entity. For example, they offer excellent liability protection, shielding members’ assets from creditors. This is because the law treats limited liability companies as separate legal entities from their owners. Partnerships do not experience the same protection, as the law does not recognize them as independent corporate bodies. This results in members’ exposure to liability from creditors.

Additionally, Delaware LLC operating agreements allow members to structure the company in ways tailored to the unique needs of the entity. They allow for flexibility in the tax treatment of the business. They are easy to form, easy to maintain and easy to dissolve when the business has run its course.

Delaware law also specifically allows for the creation of a type of LLC known as the Series LLC. Series LLCs are an arrangement by which the members and managers of an LLC can subdivide their interests into a number of separate divisions. Each division is an LLC of its own, with the asset protection and other business rights and powers of any LLC. Series LLCs allow groups to pursue various business strategies without exposing the entire enterprise to risk. One division can fail without destroying the others.

Please contact Virtual Paralegal Services if we can help you to further understand. We’re here for you.

Who is affected by a Cayman LLC?

June 28th, 2016 By Virtual Paralegal Services

Private equity funds and family holding companies could certainly benefit from the ease of use and freedom afforded by a Cayman LLC. The need for flexibility in these arrangements has often forced members into forming exempted limited partnerships, despite the liability exposure. Those looking to create a private fund will now be able to form a Cayman LLC without being forced to decide between the accounting and structural limitations of an exempted company and the need for a general partner to take the lead in managing an exempted partnership.

Most legal commentators identify the investment funds industry as the primary beneficiary of the new Cayman LLC entity. Cayman LLCs could easily expand beyond the U.S. investment field, however. The limited liability company is a relatively new phenomenon in the United States. Internationally, it is almost unknown. Cayman LLCs may become a popular choice for a range of limited use corporate transactions. Depending on the goals of the business, special purpose entities could be organized as Cayman LLCs based on the tax benefits and liability protection afforded to members.

Hedge Funds Reap Benefits

Hedge funds that use a master-feeder structure will, perhaps, be the most affected by the new Cayman LLC entity. A large number of hedge funds currently use a Delaware LLC with a Cayman exempted limited partnership or a Cayman exempted company. Typically, the Delaware LLC will serve as the sole general partner in the Cayman exempted limited partnership. The introduction of the Cayman LLC may allow for a smoother, more efficient relationship between the two participating entities.

A Clear Alternative

Choosing the right entity for a business is a vital first step. The Cayman LLC provides an alternative legal structure that may be advantageous.

Businesses looking for an offshore opportunity that finds the happy middle ground between a partnership and an exempted company should consider the Cayman LLC. In particular, family wealth companies and private equity funds should learn about this entity and its potential benefits.

For clients currently operating a Delaware LLC, the Cayman LLC could allow for the rapid and predictable creation of a partner for a master-feeder relationship. It is an alternative that is likely to be attractive to many new and current investors.

While many ventures will prefer to remain in their current forms, the possibilities that the Cayman LLC offers could improve efficiency and greatly ease the burden of managing an offshore business.

For assistance with forming a Cayman LLC and other services, please contact Virtual Paralegal Services today.

What is a Cayman LLC?

June 24th, 2016 By Virtual Paralegal Services

This is the first in a series of blogs pertaining to the pros and cons of a Cayman LLC, how to form and convert one and who most benefits. We’ll start with a basic overview here.

The laws of the Cayman Islands make it a popular choice for conducting a range of business objectives. With options that call for no taxes on income or sales, no withholding taxes, and no inheritance or capital gains taxes, the Cayman Islands actively pursues policies intended to attract business ventures. To that end, 2015 saw the introduction of a new type of vehicle called a Cayman Islands limited liability company.

The Limited Liability Companies Bill, 2015 (Supplement No. 8 published with Extraordinary Gazette No. 99 dated 18th December, 2015), establishes the rules for forming and registering an LLC. The Legislative Assembly of the Cayman Islands approved the bill in early May. The bill is expected to come into force this summer.

A Cayman LLC has the potential to improve the operation of investment funds, as well as other businesses looking for flexibility and adaptability in their structure. Attorneys looking to help their clients choose the correct entity to accomplish their goals need to be aware of the Cayman LLC and its advantages and disadvantages.

What Is the Cayman LLC Replacing?

For those who would have previously chosen a Cayman Islands exempted company, the new Cayman LLC format will likely become a popular choice. Exempted companies have a number of benefits that will continue with the LLC. In particular:

  • They enjoy the tax neutrality so prized in the Cayman Islands.
  • They can be formed with a single entity—a shareholder in this case—listed on the Registrar of Companies.
  • They have minimal reporting requirements, as well as no minimum capitalization requirement.
  • These companies do not require a general meeting of members.
  • These benefits make exempted companies an excellent choice for foreign investors who conduct most of their business away from the Cayman Islands.

Cayman exempted companies do have certain drawbacks, however. The companies must issue shares to owners based on the owners’ contributions to the enterprise. That means they must also maintain funds that arise during the issuing of shares (the “share capital). It is worthwhile to mention that exempted companies are able to issue no par value shares. This reliance on shares limits the flexibility of the arrangement as it mandates a governance structure based on initial contribution to the enterprise.

Next week, we’ll review the difference between a Cayman LLC and a Delaware LLC. In the meantime, please contact Virtual Paralegal Services with any questions you may have. We are always ready to assist.

Best Practices for Secured Claims in Bankruptcy

June 14th, 2016 By Virtual Paralegal Services

The petition is a well-rounded compilation of documents that details to the court and the trustee all of the available assets that a debtor has. When drafting a plan, it’s essential that all secured claims are represented in the plan, even if they aren’t going to be paid through the bankruptcy. Why? Because the trustee needs to know all assets are being taken care of and have a complete picture of the debtor’s finances.

Common Mistakes with Secured Claims

There are a few mistakes that tend to happen when drafting a plan for secured claims. Here are three common ones and tips for how to avoid them.

 

  1. Sometimes a secured claim is being paid outside the plan, like a mortgage or car payment. Forgetting to list a secured claim that’s paid outside the plan causes confusion for the trustee because they can’t confirm how the claim is being treated unless it’s specified in the plan. Has the car or mortgage been paid off? If not, how much is the debtor paying per month on the payment? In order for the trustee to approve the plan, he or she needs to know all the debtor’s expenses, including ones that are not included in the plan.

 

  1. Property being sold can cause confusion when it comes to confirming a plan. If the real estate is being sold either prior to or after confirmation, that needs to be listed somewhere in the plan. The money from the sale will also need to be accounted for. For example, will there be a lump sum payment? Will the debtor’s monthly payment increase? These are all details that the trustee and court will need in order to confirm the plan.

 

  1. Lease payments, timeshares, etc., are all monthly payments that debtors make, but may not make it into the plan for various reasons. Most plans have an area where you can detail these secured assets and how they’re being treated outside of the plan. Taking time to put this information in will save the trustee and you time in the long run.

 

The details of a bankruptcy case can be complex. Virtual Paralegal Services has a team of paralegals with years of experience who can assist with bankruptcy issues. Questions? Contact us today to find out how we can help.

 

Are Your Product Labels Compliant?

June 8th, 2016 By Virtual Paralegal Services

Here’s what you need to know.

What is Product Label Review?

Product label review is the process of reviewing product labels for compliance with all applicable local, state, federal, international and/or other regulatory guidelines.  Examples of products that this may include are human food, nutritional supplements, drugs, animal feed, cosmetics and medical devices.  To ensure their product labels are in compliance with applicable regulations, large companies may have trained regulatory professionals on staff and smaller companies may rely on outside label review services.  However, many times companies fail to obtain the appropriate level of review for various reasons that include time and cost.

Who Monitors Product Labels?

There are many regulatory agencies that monitor product labels.  Which agency governs depends on various elements such as the product type, intended use, distribution area and many others.  The state provides regulatory oversight of product labels for meat and agricultural commodities such as eggs, milk, grains; processed human food and nutritional supplements; and animal feed and nutritional supplements including pet food and treats.  However, as soon as these products are presented for interstate commerce, they fall under the jurisdiction of federal agency oversight.  The United States Department of Agriculture (USDA) oversees meat and raw agricultural commodities, and the United States Food and Drug Administration (FDA) oversees processed human food, animal feed, human and animal drugs and supplements, cosmetics, and medical devices.  In some cases, there are national trade-organizations that have a form of regulatory oversight.  Additionally, if these products are offered for international sale, there is a regulatory body that is responsible for ensuring products entering the country are labeled correctly.  Although limited, there are even some instances where local government has regulatory oversight over product labeling.  One example would be farmer’s market-type products.

At the state level, regulatory authority and requirements are written into state statutes and administrative code per product type.  At the federal level, regulatory authority and requirements are written into the Code of Federal Regulations as well as supplemental laws.  The majority of products regulated by the FDA are required to be labeled according to the Federal Food, Drug and Cosmetic Act and the Fair Packaging and Labeling Act.  Depending on the product type, manufacturers may be required to be licensed at the state and/or federal level and to obtain pre-sale approval for all product labeling.

If the product is offered for sale internationally, the manufacturing facility will be required to register the product in that country and obtain a certificate of free sale for each shipment. The product label must be compliant with all applicable state, federal and international regulations.

Why is Label Review So Important?

Printing product labels is often very expensive.  For example, think of animal feed products where the label is printed directly on multi-layered, colorful, 50 pound bags, or cosmetic products with eye-catching, foil labels.  If a product label is found to be out of compliance on either the state, federal, or international level, it could be placed under stop sale, restricting the product from being further distributed. This can cost a company thousands of dollars before they are able to resume distribution of their product.  This demonstrates the importance of label review before distribution and often times periodically after the product has been established.

For cost effective and reliable product label review services, please contact Virtual Paralegal Services.  Our label review professionals have broad experience across a range of industries to help ensure you are compliant.

Adequate Protection Payments Can Help

June 3rd, 2016 By Virtual Paralegal Services

If your client is close to losing a secured asset, such as a house or car, setting up adequate protection payments with the creditor may be the answer to saving their property. Adequate protection payments are used to satisfy creditor cries for immediate payments since claims in bankruptcy don’t start paying until the case is confirmed. In some cases, it could be months before a creditor will see a payment and for creditors who have been dealing with a delinquent account, this doesn’t sit well.

So, if there’s a creditor that’s pushing for relief from stay in your client’s case, bringing up the option of adequate protection payments may be enough for them to withdraw their motion for relief. Just know that creditors are typically a bit untrusting of a debtor to follow through on their commitment to pay, so you’ll need to draft a filing that outlines the conditions of the adequate protection payments.

Language for Adequate Protection

Depending on the complexity of the case, there’s no telling how long it will take for the case to get confirmed. That’s why it’s key to have the language reflected in your motion for adequate protection flexible so it can adjust with the ebb and flow of the case. You’ll need to include:

  • Payment Amount: This is the most important aspect. Be sure to come to this figure after thorough evaluation of your debtor’s finances, so you won’t have to do any amending down the road. Try to get the amount for the adequate protection payment to match what the claim amount through the plan will be once it’s confirmed.
  • Creditor Information: Be sure the trustee has the payment address for the creditor. Claims won’t get setup for payment until the case is confirmed and are generally taken off the proof of claim. If the need for adequate protection payments is required early in the case, it’s possible the creditor hasn’t filed a proof of claim so you’ll need to provide the necessary information to the trustee so they can set up the claim for payment.
  • Debtor Payments: Plan payments start 30 days after the filing of the petition. You’d be amazed by how many debtors don’t understand this and miss the first few payments. If your client is doing adequate protection payments, it’s even more important they stay current on their payments. A creditor has the right to pursue a relief from stay if the terms negotiated in the motion aren’t upheld. Patience is thin for most creditors in this situation. They probably have been dealing with delinquent payments for quite some time. Be sure your client understands that if they miss a payment, they may lose their property. Adequate protection is a great way to resolve a frustrating situation, both for the creditor and debtor. When done properly, it’s a win-win for all involved.

Motions can be complex in bankruptcy. That’s why Virtual Paralegal Services has a team of paralegals with years of experience who can handle bankruptcy issues. Let our experienced team of paralegals do the hard work for you so you can do more.

Contact us today to find out how we can help.

What’s Your Trustee’s Role in Bankruptcy Cases?

June 1st, 2016 By Virtual Paralegal Services

If you routinely file bankruptcy cases, it’s a good idea to develop a relationship with your trustee. A trustee’s role in bankruptcy is to ensure that both debtor and creditor are treated fairly. This requires the trustee to work with you and creditor attorneys. The benefits of knowing your trustee and developing a relationship could be critical to the survival of your case.

Earning Trust and Rapport

Sometimes a Chapter 13 case teeters on the edge of survival. Perhaps you have a plan in place for the success of your case, but you need more time to develop it and the deadline for confirmation is fast approaching. Having a professional relationship with your trustee and a proven record of follow through will go a long way when a trustee is deciding on approving a legal path a little outside of the box.

A Well of Legal Knowledge

If anyone knows bankruptcy inside and out it’s the trustee. If you’re stuck and not sure how to proceed, the trustee may be able to steer you in the right direction, provide legal resources to research, or give you legal options to think about. Remember, the trustee’s role is to help the debtor and the creditor. Take advantage of their knowledge.

The Difference between a Dismissal and a Reprimand 

Trustees have a set of rules and regulations they have to follow, but their main goal is to see the debtor succeed and creditors made as whole as possible. As an attorney you can only do so much to control your client’s responsibility in getting documents to the trustee. Some trustees will dismiss immediately if a document isn’t on time. However, if you have a relationship with the trustee’s office, it could be the difference between a dismissal being filed or a friendly call from the trustee’s office to let you know the documents haven’t been received yet. That being said, get to know and treat the trustee’s staff with respect. Often support staff can help you get what you need faster than the trustee and odds are, the trustee probably won’t take your call out of the blue.

Networking

If you’re new to bankruptcy and want to meet more attorneys in your practice area, the trustee is a great way to do that. Trustees tend to work with the same attorneys and have developed long-term relationships. They are often happy to make introductions. Law is a social practice. Use your networking skills to grow contacts. It makes you a better attorney. You’ll have a wider knowledge base to draw from and build resources to help you and your clients succeed.

Virtual Paralegal Services also has a team of paralegals with professional client service skills. VPS assists law firms with bankruptcy proceedings and petition preparation. Let our experienced team of paralegals do the hard work for you so you can do more.

Contact us today to find out how we can help you.

« Older Entries Newer Entries »