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Washington Mergers & Acquisitions Questions & Answers
1 Answer | Asked in Bankruptcy, Business Law and Mergers & Acquisitions for Washington on
Q: Can litigation be used to drain a company of its capital and leave it vulnerable to a takeover by the plaintiff?

Hi everyone, I don't have any specific geographical location in mind, so if lawyers have examples of laws that they know of, regardless of region, it'd be interesting to hear them:

Is there anything in the law to prevent litigation used by one larger company (that can handle... View More

Timothy Denison
Timothy Denison
answered on Jan 4, 2023

Generally not unless it involves the purchaser becoming so large as to violate the Sherman Anti-trust Act. The activity you describe is called corporate raiding but is usually legal when performed within the rules of a particular state.

1 Answer | Asked in Business Formation, Business Law and Mergers & Acquisitions for Washington on
Q: A foreign company wants to purchase part of my LLC. Do I have to reform as a C-Corp?

As an LLC, we file as an S-Corp for federal taxes. We have an existing contract with the foreign company for services, resulting in expected revenue for 3 years. Can they purchase part of the LLC even though we file as an S-Corp? Or should we reform as a C-Corp. What then becomes of the existing... View More

Jonathan R. Roth
Jonathan R. Roth
answered on Sep 15, 2017

You would have to elect to be taxed as a partnership or as a C-Corp. A foreign entity cannot own part of an S-Corporation. However depending upon the purpose of the investment and the nature of how you want to operate there may be an alternative set of structures to accomplish your goal.

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