Corporate Finance & Securities

Series | Understanding Hedge Funds

In this iVLG blog series, we discuss setting up and managing a hedge fund. We know that forming a hedge fund can be a complex and difficult task, especially with the number of regulations affecting hedge funds, their managers, and their investors. Our goal is to help you understand what it takes to set up a hedge fund, the key provisions contained in the securities documents typically associated with a hedge fund, and how to properly vet your investors.

The hedge fund series will breakdown the following:

Accredited Investor v. Qualified Client Requirement Entity Structure Performance Fees Side Pocket Accounts

We will update this page with the link to the post as the posts are completed. Please feel free to comment below if you’re looking for additional information...

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Business Startup

Back to the Basics: Choosing the Right Entity For Your New Business: Part 1: Sole Proprietorships and Partnerships

There are many considerations when you start a business: refining your products and services, developing your sales and marketing strategies to attract customers, securing a lease, and hiring employees. Because it can directly affect the other aspects of your business formation, one of the most important first steps in forming a business is organizing the business using the proper legal entity. To help you understand the issues and help you choose the right type of entity for your new business, we will discuss the various business types, including their pros and cons. Today’s post will cover sole proprietorships and partnerships, our next post will cover LLCs and corporations, and our final post will consider limited liability partnerships.

The Sole Proprietor A sole...

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Business Startup

Series LLC: The Rise (and Risks) of a New Limited Liability Entity | Post 4

This post continues our exploration of series LLCs and their treatment in bankruptcy proceedings.

Option Three: Enterprise Law In some situations, an LLC will appear to be separate in its operating agreement, but in reality function in a more integrated manner.  In these situations, a court would find the LLC is substantively consolidated and apply the doctrine of enterprise law.

Unlike entity law, enterprise law does not presume boundaries of liability. Instead, enterprise law looks at the situation as a whole and determines whether various firms are engaged in a joint enterprise. Our last post discussed four factors courts will use to determine the extent of separateness or consolidation of entities within a corporate group. To establish actual boundaries between each series, an...

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Business Startup

Series LLC: The Rise (and Risks) of a New Limited Liability Entity | Post 3

This post continues the discussion of series LLCs and bankruptcy. There are still unanswered questions in this area of law. Today we’ll explore a second possible option for how bankruptcy court should treat series LLCs: entity law with exceptions approach.

Option Two: Entity Law with Some Exceptions Recall that to file for bankruptcy, a series must be a “person” under the Bankruptcy Code (the “Code”). Typically, LLCs are treated as a “person” by bankruptcy courts even though they aren’t mentioned in the definition in the Code. At this point, no court has determined a cell’s “personhood” for bankruptcy purposes.

Entity law is the general starting point for corporate groups in bankruptcy. Entity law is the body of law that creates formal legal boundaries...

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Business Startup

Series LLCs: Exploring the Rise (and Risks) of a New Limited Liability Entity | Post 2

To follow up last week’s post that detailed the background of series LLCs, I wanted to bring to light one of the major risks related to starting a series LLC. Today’s post takes a look at the issues presented by unanswered questions pertaining to treatment of series LLCs and bankruptcy. Over the course of the next few weeks, we’ll discuss four possible options for how bankruptcy could (and perhaps, should) handle series liability during bankruptcy proceedings. Today’s post explores option one: impenetrable boundaries between series.

Are individual series able to file for Bankruptcy? If an insolvent series (or cell) is to protect the other cells from its liabilities, it would make sense that the individual cell could file for bankruptcy. Right? Unfortunately,...

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Business Startup

Series LLCs: Exploring the Rise (and Risks) of a New Limited Liability Entity

A new type of limited liability company is beginning to gain popularity. The Series LLC provides a way to segregate liability, control, and profit-sharing within a single entity. Today’s post will provide some background behind the rise of the Series LLC. Next week’s post will highlight some of the risks and possible options for disposing of those risks.

Delaware Taking Lead As is the case with much business-related legislation, Delaware took the lead in creating this unique limited liability entity. In 1996, Delaware passed legislation under the Delaware Limited Liability Company Act that enabled the formation of Series LLCs. Delaware’s legislation has served as a model for other states, including Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas, and Utah. Under Delaware law, a...

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Business Startup

Social Purpose Corporations in Washington

Legislation creating social purpose corporations has passed both the Senate and the House, and is expected to be signed by the Governor this month.

In January, we wrote about bills in the Washington legislature that would create of a new corporate form for Washington businesses–the social purpose corporation. In February, the House passed HB 2239, a bill creating social purpose corporations, by a margin of 62-31. And in early March the Senate passed its version of the bill, SB 6230, by a margin of 34-14. Governor Gregoire is expected to sign the bills into law this month. To view the bill creating social purpose corporations as passed by the legislature, click here.

For more information about what social purpose corporations are, and...

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Business Startup

LLC Operating Agreement series: Management Structure

Over the next few months we’ll be discussing some of the common terms of an Limited Liability Company operating agreement in a series of posts. The operating agreement provides the framework for operating and managing the business. The operating agreement provides the rights and obligations of the members, including members’ management abilities and economic interests. Without an operating agreement, Washington LLCs are governed by the default provisions provided in RCW 25.15 . In this first post, we’ll discuss the management structures and choices available for an LLC.

Key Feature: Flexibility

In Washington, the LLC statutes are incredibly flexible. LLCs are easily adaptable to the changing needs or circumstances of the members and the business. There’s also flexibility when choosing the management structure of the company. The primary constraint...

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Business Startup

The Social Purpose Corporation: A New Corporate Form in Washington?

Update: Legislation creating social purpose corporations has passed both the Senate and the House, and is expected to be signed by the Governor this month.

The Washington State Senate and House are considering legislation that would create a new corporate form: the social purpose corporation. The Senate bill is SB 6230, and the House bill is HB 2239. The legislation was drafted and requested by the Corporate Act Revision Committee of the Washington State Bar Association.

Background Under current Washington law there is no ideal corporate form for businesses that want to consider both the bottom line and a social mission. You can create a business that focuses on profits, a corporation. Alternatively, you can create a business that focuses on a social mission,...

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Business Startup

No Professional Degree Required: Two Important Steps You Can Take To Develop Your Business Plan

As the new year fast approaches, it’s an excellent time to take some time to reflect on your ideas and start to write a business plan for launching your start-up. Here’s the best part, you can write your business plan for free. You won’t have to invest anything, other than a little time, to develop a bullet-proof business strategy to grow your business. Today’s article will focus on the initial steps of writing a business plan, and provide some tips on how to find easy-to-use online resources to guide you through the process or building a successful business plan.

Determine Who You Are The first step is to take some time to think about exactly what your business is? What services do...

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