Business Law Practice

CFPB Adopts Strict Liability Standard for Debt Collectors Who Sue or Threaten Suit Over Time-Barred Debt

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On January 19, 2021, the Consumer Financial Protection Bureau (CFPB) published its final debt collection rules in the Federal Register, including 12 C.F.R. § 1006.26(b), which prohibits collections of time-barred debt. Under the new rules, collectors who sue or threaten to sue consumers for time-barred or “zombie” debts ‒ debts for which the statute of limitations already expired ‒ violate the Fair Debt Collection Practices Act (FDCPA).

Corporate Transparency Act and Implications for Entity Formation and Transaction Structures

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The 116th United States Congress passed the National Defense Authorization Act for Fiscal Year 2021, which includes the Corporate Transparency Act (the CTA). The CTA seeks to provide appropriate safeguards to identify bad actors engaged in terrorism, money laundering, sex trafficking and other heinous acts through “shell companies” that are not actually engaged in a bona fide business venture but instead are created for the principal purpose of shielding the owners from liability for engaging in illicit behavior and, in many cases, their identities.

Antitrust Implications of COVID Surcharges

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While it may seem justified for businesses facing increased costs in these trying COVID-19 pandemic times to add “COVID surcharges” to ensure they can keep their doors open, businesses and their corporate counsel should be aware that such surcharges can raise serious competition concerns and need to be carefully navigated.

Court Addresses Arbitration Provision in Connection With Post-Petition Debtor Contracts

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In Woodbridge Wind-Down Entity v. Monsoon Blockchain Storage, the U.S. Bankruptcy Court for the District of Delaware (the “Court”) addressed the enforceability of an arbitration provision in connection with a post-petition contract entered into by the debtors and a non-debtor counterparty. The Court first concluded that Paragraph 22(B) did provide for the arbitration of disputes under the APA. However, the Court then found that the Addendum represented the parties’ actual intent and that its language controlled. In light of the Addendum’s unambiguous language, the Court concluded that the parties did not agree to arbitrate claims under the APA.

Publication of the Model Business Corporation Act Annotated (5th edition)

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The 5th edition of the MBCAA of course contains the full text of the Model Act, reflecting all amendments and Official Comments through July 1, 2020, including the substantial revisions effected by the 2016 revision of the Model Act, and more recent additions such as the provisions authorizing virtual-only shareholder meetings and public benefit corporations. Extensive additional resources, however, distinguish the newly published MBCAA from other published versions of the Act and, indeed, from other corporate law treatises.

SEC Expands the Definition of Accredited Investor

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SEC rules governing accredited investors are designed to protect individual investors from risks that could result from the lack of regulatory oversight associated with unregistered private securities offerings. By expanding the definition of “accredited investor,” the SEC has provided more investors with the opportunity to access alternative investments and given companies, private-equity firms, and hedge funds access to a larger pool of investors.