Default Judgment

Why you Should Purchase the Assets of a Company Rather than the Stock

by Fred Abramson

One of the prob­lems that you may encounter when buy­ing a busi­ness in New York is under­stand­ing how to struc­ture the pur­chase.  Basi­cally, there are two ways that you can buy a company:

  1. Asset Pur­chase;
  2. Stock Pur­chase.

In most cases, you will be bet­ter off pur­chas­ing the assets. There are three big ben­e­fits to buy­ing the assets and not pur­chas­ing the stock:

  • Tax ben­e­fits. With an asset pur­chase, you can give dif­fer­ent pur­chase prices among the var­i­ous pieces of the com­pany.  For exam­ple, cer­tain equip­ment can be deducted imme­di­ately so you may want to assign a greater price for those assets.
  • You can choose not to acquire lia­bil­i­ties of the busi­ness you wish to buy. Per­haps the com­pany failed to pay a sup­plier for goods it ordered two years ago.  The statute of lim­i­ta­tions on a breach of con­tract law­suit is six years, so you could be hit with a law­suit four years after buy­ing the company.
  • You don’t have to buy every asset of the cor­po­ra­tion. It could be in you best inter­est to buy only the prof­itable por­tions of the company.

Some­times you are not given the choice of how a busi­ness sale could be struc­tured.  Many busi­ness that are for sale require pur­chase of stock only for a vari­ety of rea­sons. For exam­ple, the seller may believe that there are tax advan­tages for sell­ing all the stock.  If you have to buy cor­po­rate stock, it is imper­a­tive to con­duct a thor­ough inves­ti­ga­tion of the corporation’s books and oth­er­fi­nan­cial deal­ings.  You can insert war­ranties and indem­ni­fi­ca­tion clauses in the stock pur­chase agree­ment. You may also be able to pur­chase insurance.

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Why you Should Purchase the Assets of a Company Rather than the Stock

Your small business is a party to a New York Civil Litigation lawsuit. How can you protect yourself?

by Fred Abramson

You are sit­ting in your office on the busiest day of the year, and just when you think noth­ing else could go wrong, a per­son walks in and utters the fate­ful words “You’ve been served”, while hand­ing you a stack of papers.   Your busi­ness is a party to a New York civil lit­i­ga­tion law­suit. Your busi­ness has  just been sued.  What is the best course of action you can take, and how can you pro­tect your­self as well as your business?

Your small business is a party to a New York Civil Litigation lawsuit. How can you protect yourself?

Who?

Read the papers that are given to you to find out the party that is suing you and the type of civil lit­i­ga­tion you are involved in.  Is it a cor­po­ra­tion, a part­ner­ship, or an indi­vid­ual?  Are they a cus­tomer or a sup­plier of your busi­ness? Who is the lawyer rep­re­sent­ing the party that is suing you?  This infor­ma­tion will help your attor­ney obtain a more favor­able result for you by research­ing the other party and its coun­sel. (Do they set­tle often?  Are they a big com­pany?  What are their finan­cial resources?  Do they have a rep­u­ta­tion to main­tain and there­fore may want to set­tle quickly?).

What?

What exactly are you being sued about?  Is it a breach of con­tract claim? Is it a non-payment claim, or a non-performance claim?  Those are many rea­sons why a busi­ness may be sued.

When?

In Civil Lit­i­ga­tion, tim­ing is crit­i­cal in a law­suit.  Responses must be filed within a set period, which in New York is  usu­ally within 30 days.  While an exten­sion can be granted, don’t wait until the last minute to con­tact your attor­ney.  It takes time to pre­pare an appro­pri­ate answer to the papers.  If you do not respond in a timely fash­ion, you will be con­sid­ered in default, and a judg­ment may be taken against you.  This means you may lose the case with­out the oppor­tu­nity to pro­vide a defense.

Also, don’t assume you are judg­ment proof, because judg­ments can be col­lected from future earn­ings as well as assets.  In addi­tion, do not assume that your insur­ance cov­ers every­thing, although it may be wise to notify your insur­ance car­rier as well as your attorney.

Where?

What court are you being sued in?   What county?  State or Fed­eral Court? You may be sued in a state far away if, for instance, you have done busi­ness in that state.  In that case, your New York attor­ney will have to obtain local coun­sel for your small busi­ness in the other state, and this takes time.

Why?

Why did the party resort to a law­suit?  Is it some­thing you can fix by hav­ing your attor­ney talk to the other side and nego­ti­ate a set­tle­ment?  Is there a run­ning ani­mos­ity between your com­pany and the other party, in which case set­tle­ment will be dif­fi­cult?  Do you need to file a coun­ter­claim against the other party?

How?

Imme­di­ately notify and sup­ply the civil lit­i­ga­tion  law­suit papers to your attor­ney.  Make sure you retain a pho­to­copy for your­self.  Inform your attor­ney of all the facts rel­e­vant to the case.  Your attor­ney will decide what is impor­tant and what is not.


Orga­nize your doc­u­ments per­tain­ing to the case so that you can min­i­mize the time the attor­ney must spend going through them.  This will save your attor­ney ’s time, and there­fore save you legal fees.  Do not talk to the other party’s attor­ney.  He works for the other party, just as your attor­ney works for you.  Let your attor­ney do this for you.  In addi­tion, remem­ber that in law, just as in any pro­fes­sion or busi­ness, there are rules and pro­ce­dures  your attor­ney knows and you may not.  To stay out of trou­ble, leave the legal work to your attorney.

A trial can take sev­eral weeks in New York, includ­ing prepa­ra­tion time.  There­fore, it may be in your best inter­est in cer­tain cases to set­tle.  How­ever, be real­is­tic in your set­tle­ment expectations.

Con­clu­sion

Hav­ing an ongo­ing attorney-client rela­tion­ship will help pro­tect you in the event of a civil lit­i­ga­tion law­suit.  The more your attor­ney knows about your busi­ness, the bet­ter the attor­ney will be able to help you.  In addi­tion, dis­cussing busi­ness options and prob­lems with your attor­ney ahead of time could help pre­vent a law­suit from ever start­ing.  Either way, it will save you money in the long run.

Please be advised that the above is for infor­ma­tional pur­poses only. If you have been sued, con­tact me at the Law Office of Fred­eric R. Abram­son at 212–233-0666.

Do you have a Default Judgment against you in NY? It may be void.

by Fred Abramson

The New York Attor­ney Gen­eral announced today that they are suing 35 law firms for improper ser­vice of default Do you have a Default Judgment against you in NY? It may be void. judg­ments. A party obtains a default judg­ment when the defen­dant does not appear in a law­suit. Amer­i­can Legal Ser­vice, a process server located in Long Island has been named by the Attor­ney Gen­eral as pro­vid­ing improper \“sewer\”  ser­vice.  The 35 law firms have not been accused of any wrongdoing.

If you wish to re-open a default judg­ment against you due to improper ser­vice based on the Attor­ney General\‘s action today you should:

1.  Go to the county clerk in the county where the default was filed and obtain the court file.  Check the affi­davit of ser­vice to see if Amer­i­can Legal Ser­vice was the process server.

2.  If you are unable to ascer­tain the name of the process server, check the law firm who started the law­suit.  If it is one of the 35 law firms listed in the Attor­ney General\‘s com­plaint then:

3.  File a motion to vacate the default for improper ser­vice of process.

At this point, it is unclear what the reme­dies would be for insti­tut­ing an action, espe­cially in cases where the statute of lim­i­ta­tions has run for vacat­ing a default.  In New York, the statute of lim­i­ta­tions is one year.  How­ever, the court or some other gov­ern­men­tal body may fash­ion new law based on this mass fraud.

Do you have a Default Judgment against you in NY? It may be void.