Legislation establishing a new form for "do good" businesses – the Benefit Limited Liability Company – has passed the Maryland General Assembly and is en route to the governor to be signed into law.  In December we covered the Maryland Benefit Corporation Act, the first law of its kind in the United States.

The Maryland Court of Appeals recently held that lenders can’t skirt foreclosure requirements by making borrowers sign a deed in lieu of foreclosure at the closing, before the borrower has even defaulted.  In that case the lender required the borrower to execute both a deed of trust and a deed in lieu of foreclosure as security for the loan at closing.  The deed in lieu of foreclosure stated that if the borrower defaulted, the lender could immediately take title without a foreclosure proceeding.  After the borrower defaulted, the lender recorded the deed in lieu of foreclosure to take title to the property without a foreclosure proceeding. The Court of Appeals called it a “‘heads I win, tails you lose’” arrangement, requiring the borrower to give up its right to a foreclosure proceeding at the outset, before the borrower had even defaulted.  The Court held that the deed in lieu of foreclosure did not convey the title to the lenders – rather, the Court treated it as a mere mortgage, which requires the lender...

 Not long after the Court of Appeals asked whether it could do away with the contributory negligence defense by making a rule change, Del. Benjamin F. Kramer introduced House Bill 1129, entitled "Maryland Contributory Negligence Act," which would make the contributory negligence defense part of Maryland’s statutes.

Imagine one of your employees, driving a company vehicle, rolls through a stop sign and smashes into another driver.  The other driver was speeding and was dialing a number on her cell phone.  So who is at fault?  And most importantly, who has to pay?

 If so, there may be changes in the way your loans are handled in bankruptcy court.  Although lenders never want to be creditors in bankruptcy proceedings, in the past they thought that if their collateral was sold, they could bid up to the full amount of their claim, without putting out any cash.  To the contrary, in 2010, a federal appeals court ruled that secured creditors do not have an absolute right to “credit” bid when their collateral is sold under a Chapter 11 plan of reorganization.

Credit bidding allows a secured creditor to bid up to the full amount of its debt claim at a sale of its collateral, without actually having to tender cash to acquire the collateral.  Traditionally, credit bidding protects secured creditors by ensuring proper valuation of the collateral at the sale and preventing other bidders from acquiring the collateral at bargain prices.

In this case, the debtor’s plan provided that almost all of its assets would be sold at auction, and the secured creditors would be given...

On October 1, 2010, the Maryland Benefit Corporation Act – the first law of its kind in the United States – went into effect.  The Act creates the “benefit corporation,” a new corporate form that unites two formerly incompatible concepts: making a profit and advancing social and environmental goals.  Benefit corporations can focus on the so-called “triple bottom line” of people, planet, and profit.

On September 27, 2010, President Obama signed the Small Business Jobs Act (the Act) into law.  The Act will benefit small businesses in several ways, including extensions of Small Business Administration (SBA) lending programs and tax breaks.