Michigan Business Law Blog

Michigan business owners typically run into problems as they operate their company. It is just part of the job. The same could be said regarding disputes in the business industry, whether with an employee or another company.

Business mediation is often required between parties in order to reach an agreement regarding matters like contract disputes, intellectual property or trade secrets. Sometimes, mediation is not successful and a court appearance must be made. In recent news, automotive manufacturer, Chrysler, and another Michigan company, Pure Detroit, were able to settle their ongoing business dispute.

A popular Michigan-based competition, known as 5x5 Night, provides an opportunity for entrepreneurs to pitch their food-related business ideas. If the judges are interested, the participants may receive investment money to kick start their idea and begin the business formation process. Two participants were able to come together to form a new business after one of them received funding based on their pitch.

The two individuals collaborated with one another to create the Grand Rapids Cooking School. This cooking school offers classes to teach new and creative ways to cook, at a low cost, for anyone looking to learn in a casual atmosphere. Right now, the two are working together to determine the best way to get this business up and running effectively financially.

When a business is involved in commercial litigation, such as when a consumer files a complaint against a company, there are many factors that can have unforeseen effects on a business' strategic position.

A recent Michigan newspaper report provided details on how a Montana company is now tied up in a cyber-spying lawsuit that allegedly involves a Pennsylvania based software company, DesignerWare.

Written by Kenneth F. Silver, Esq.

Recently, I wrote a blog concerning the Cherryland Mall case wherein a presumably non-recourse CMBS loan was determined to be recourse because the borrower's default was held to be a breach of the insolvency covenant set forth in the loan documents. This case placed hundreds of guarantors of CMBS loans in a precarious position because loans that were thought to be non-recourse all suddenly became recourse. Within only a matter of weeks of the decision by the Michigan Court of Appeals, the Michigan legislature passed a bill prohibiting a solvency covenant from being used as a non-recourse carve-out or "as the basis for any claim or action against a borrower or any guarantor or other surety on a nonrecourse loan." The bill was signed by Governor Snyder on March 29, 2012.

Many believe that the bill was rushed through the legislature because the original guarantor of the Cherryland Mall loan was David Schostak, the brother of Robert Schostak who is the Chairman of the Michigan Republican party. The attorneys who represented Wells Fargo in the Cherryland case have vowed a constitutional challenge.

The new statute actually rectifies a potential disaster for hundreds of guarantors who thought their exposure was limited only to the "bad acts" specifically carved out in the loan documents. These "bad acts" included things like pulling money out of the deal before making mortgage payments or improperly transferring interests. To say the least, it will be interesting to see what happens next. For now anyway, those who guarantied CMBS loans are safe as long as they don't violate any of the remaining carveout provisions.