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Blog of Interesting Legal Topics

Welcome to the Gross &Romanick, P.C. Blog. We are a law firm located in the dynamic County of Fairfax, Virginia. We assist individuals and businesses with legal matters in Virginia, Maryland and Washington DC. We take an aggressive and creative approach to achieve our client’s goals.

Assignment of Commercial Leases | Gross & Romanick, P.C.

In most business sale transactions, the buyer will want to operate the business at the current location(s) after the sale. As a result, the seller’s real property leases must be “assigned” to the buyer as of the closing date of the sale. A commercial lease is “assigned” when the buyer steps into the shoes of the seller and becomes the “tenant” under the lease. In the vast majority of cases, the written consent of the landlord must be obtained before the lease can be assigned to the buyer. One of the first things the buyer should...

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Asset Sale or Equity Sale? | Gross & Romanick, P.C.

There are two primary methods for buying or selling an existing business: (1) The asset purchase and, (2) The equity purchase. The advantages and disadvantages of each method should be assessed in every business sale. The purpose of this article is to explain in very general terms how these two transactions differ. In the equity purchase, the buyer acquires an ownership interest in the business that is sufficient to control the company. If the business is a corporation, the buyer purchases stock in the corporation from the existing shareholders. If the business is a limited liability company (LLC), the buyer...

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Gross & Romanick Sponsors PRS Non-Profit Work Derby Day 2017

Gross & Romanick is proud to be a sponsor of this year’s Raising the Stakes for Hope & Recovery event, benefitting PRS, Inc., (www.prsinc.org). PRS is a nonprofit helping those living with serious mental illness or facing life crises in our local community. Their annual Kentucky Derby tradition. Raising the Stakes for Hope & Recovery Benefit will take place at the Hidden Creek Country Club in Reston, Virginia on Saturday, May 6, 2017, 5:00 – 8:30 pm. The event features watching the 143rd Run for the...

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Can a business owner be held personally liable for the obligations of an entity operating under a tradename?

In Virginia, a business entity is permitted to operate under a name that differs from the legal name of the entity. For example, a restaurant business owned by “John Doe, Inc.” could choose to operate under the name “Johnny’s Diner”. This operating name is generically referred to as a tradename, but may also be referred to as a “DBA” (doing business as), or “A/K/A” (also known as), or “T/A” (trading as). The technical legal term for a tradename in Virginia is a “fictitious name”. Virginia law requires any business entity (domestic and foreign) operating under a tradename in Virginia...

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What is the difference between a merger and an acquisition? – Registered Agent Newsletter

Business sales and combinations can take a variety of forms, and there is no standard method by which businesses are purchased or acquired. Each transaction is unique, with the form of the transaction dependent upon the goals of the parties, the existing legal structures of the parties, and the tax consequences resulting from the transaction. The terms “merger” and “acquisition” are often used interchangeably in reference to the sale and combination of two business entities, but each term has a distinct legal meaning. The purpose of this article is to differentiate between the two terms - not to analyze the...

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Is a business owner personally liable for company debts if the company’s registration lapses?

The previous two editions of the Gross & Romanick newsletter discussed the termination and dissolution of Virginia corporations and limited liability companies (LLC) (both referred to as “entities”). As discussed in those articles, the Virginia State Corporation Commission (SCC) will automatically terminate an entity’s corporate existence if the entity fails to pay its annual registration fees. This edition of the newsletter discusses the potential personal liability of the owners and managers of an entity that is so terminated. Upon the termination of an entity, whether voluntary or involuntary, individuals who enter into agreements, commit negligent acts, or take any actions on...

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Should a Virginia company formally dissolve and terminate when it is going out of business?

The process of dissolving and terminating a Virginia corporation or a Virginia limited liability company (each generically referred to in this article as an “entity”) was discussed in the January edition of this newsletter. As stated in that article, when a business owner desires to close an entity, he or she can elect to formally dissolve and terminate the entity, or simply fail to pay the annual fee owed to the State Corporation Commission (SCC) (in which event the SCC will automatically terminate the...

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What is the difference between dissolution and termination of an entity?

This article distinguishes between the terms “dissolution” and “termination” as they pertain to Virginia corporations and Virginia limited liability companies (generically referred to in this article as “entities”). These terms are often used interchangeably, but have distinct legal meanings. Dissolution is the winding up of the affairs of the entity in advance of the termination of the entity. Termination of the entity occurs when the entity ceases to legally exist. The phrase “winding up of the affairs” generally means the payment of all debts, liabilities, and obligations of the entity, and the liquidation and/or distribution of any remaining assets...

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Should I incorporate my new business entity in Delaware?

So many owners of small or mid-sized businesses ask us about the benefits of incorporating their entities (corporation or LLC) in Delaware. There is clearly an assumption in the business community that there has to be some benefit to Delaware registration. Why else would most of the Fortune 500 companies do the same? Our usual response is that for most small and medium-sized businesses headquartered outside of Delaware, it makes little economic or legal sense to incorporate in Delaware, notwithstanding the mystique surrounding a Delaware incorporation. Why are some of the largest companies in the U.S. incorporated in Delaware? Delaware has...

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Purchasing a Business: Legal Due Diligence | Gross & Romanick, P.C.

Purchasing an existing business is a complicated process with several stages. The most important stage for the buyer is the “due diligence” study. A thorough due diligence study should reveal areas of concern and possible mismanagement by the seller. The study will assist the buyer to make an educated determination whether to proceed with the purchase. Regardless of the structure of the purchase transaction (asset sale or equity sale), it is imperative that the buyer conducts a comprehensive review of the business, both from a financial and legal perspective. Hiring an experienced attorney is critical for the legal review, and...

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