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Reginald B. Gillespie, Jr. Recognized in Business North Carolina’s 2025 Legal Elite

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Wilson Ratledge is proud to announce that attorney Reginald B. Gillespie, Jr. was again elected by his peers for inclusion in the 2025 edition of Business North Carolina’s Legal Elite.  He was recognized in the field of litigation.

Each year, Business North Carolina sends ballots to members of the North Carolina Bar Association who are residents of the state, asking, “Of the Tar Heel lawyers whose work you have observed firsthand, whom would you rate among the current best in these categories?”

Congratulations Reggie!

CTA/BOI Reporting Update 2/7/2025

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CORPORATE TRANSPARENCY ACT STILL ON HOLD as of February 7, 2025:

TL;DR:  The government has included a PROPOSED order with a Motion to Stay pending appeal of the injunction in Smith et al v. U.S. Department of the Treasury, 6:24-cv-00336 (E.D. Tex.).  That order has not been signed, but stay tuned.  It could be at any moment given the SCOTUS decision in the Texas Top Cop Shop case.  The motion to which that proposed order is attached states, “If the stay is granted, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) intends to extend the Corporate Transparency Act (CTA) compliance deadline for thirty days. During that period, FinCEN will assess whether it is appropriate to modify the CTA’s reporting requirements to alleviate the burden on low-risk entities while prioritizing enforcement to address the most significant risks to U.S. national security. Staying the grant of preliminary relief will help facilitate that process.”

MORE INFO: I’ve been posting frequently as consequential developments occurred, first and mostly in connection with Texas Top Cop Shop, Inc. v. Garland, 4:24-cv-00478 and more recently in connection with Smith.  The action in Texas Top Cop Shop was fast and furious for a while (over the holidays – thanks guys), ultimately resulting in SCOTUS lifting the nationwide injunction on enforcement of the CTA originally issued by the district court in that case.  Despite that, as of today, February 7, 2025, filing remains voluntary due to another nationwide injunction, also issued by the U.S. District in the Eastern District of Texas.  I noted on January 23, 2025 that injunction may meet the same fate as that in Texas Top Cop Shop.  On February 5, 2025, the government pressed the matter by filing in the Smith case a Notice of Appeal and Motion to Stay with the proposed order discussed above.  That in junction now heads to the same Fifth Circuit Court of Appeals that previously reversed, and then reinstated the Texas Top Cop Shop injunction.  Given the Supreme Court’s ruling in Texas Top Cop Shop, it will be interesting to see how the Court of Appeals will rule this time.  

Below is a summary of the events since the 12/3/2024 nationwide injunction original came down in the Texas Top Cop Shop case:

  1. 12/6/2024: The government appealed the preliminary injunction in Texas Top Cop Shop. 
  2. 12/23/2024 The Motions Panel of the Fifth Circuit Court of Appeals GRANTED the government’s motion to stay the injunction issued December 3, 2024 in Texas Top Cop Shop, Inc. v. Garland.  This was the only court action reinstating, ever so briefly, enforcement of the CTA.  This triggered FinCEN to post extended deadlines.
  3. 12/26/2024: The Merits Panel of the Fifth Circuit Court of Appeals vacated the portion of the Motions Panel’s Order granting the stay of the 12/3 injunction, putting CTA on hold nationwide once again, where it remains as of this writing.
  4. 12/31/2024: DOJ filed application with SCOTUS to lift the injunction.
  5. 1/7/2025: The U.S. District in the Eastern District of Texas issued another nationwide injunction of CTA Smith et al v U.S. Department of the Treasury.
  6. 1/23/2025: SCOTUS lifted the nationwide injunction in Texas Top Cop Shop and did not directly address any other case, including Smith.
  7. 2/5/2025: Government files Notice of Appeal and Motion to Stay with the proposed order in Smith.

Campbell K. Kargo Honors First Responders

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The Wills for Heroes program provides essential legal documents at no cost to first responders and their spouses, including simple wills, health care powers of attorney, financial powers of attorney, and advance directives.  The foundation’s aim is to ensure that the families of first responders are well prepared in the event that a tragedy occurs.

The North Carolina Bar Foundation will hold a Wills for Heroes event on February 5, 2025 and February 6, 2025, and Wilson Ratledge is extremely proud to announce that Attorney Campbell K. Kargo will volunteer her services.

“It is a privilege to be able to serve the first responders in our community who serve us every day.  I look forward to helping them make decisions to protect their future.”  – Attorney Campbell K. Kargo

Wilson Ratledge honors the courage and dedication of all first responders for the outstanding service they provide to our community. Thank you for all you do!

Do I Need A Lawyer When Buying Or Selling A Company? Absolutely!

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Mergers and acquisitions (M&A) are transformative events for any business and the people involved. They can open doors to new markets, create economies of scale, and drive growth – or, they can turn into a disaster without the right partner to help guide you through the process. 

In North Carolina, businesses seeking to engage in M&A transactions need more than just a handshake; they need the guidance of a seasoned North Carolina mergers and acquisitions law firm to avoid potential pitfalls and ensure success on both sides of the transaction.

What Does The Business Purchase and Sale Process Look Like?

If you’ve never bought or sold a business before, the process can be daunting. What looks like a fairly straightforward transaction can be full of pitfalls without an experienced partner at your side. For most transactions, you’ll follow a process similar to this once you’ve identified a buyer (if you’re selling) or someone looking to sell their business (if you’re buying):

  • Preliminary Evaluation: The buyer conducts an initial review of the target company, including its financials, operations, and market position, to determine if it aligns with the acquisition goals. This is done under a non-disclosure agreement (NDA) to ensure privacy for any information shared.
  • Letter of Intent (LOI): Once a suitable target is identified, the buyer issues a non-binding Letter of Intent outlining the proposed terms and structure of the deal. This shows serious interest and sets the framework for negotiations.
  • Due Diligence: The buyer conducts an in-depth analysis of the target company. This includes financial audits, legal checks, operational reviews, and risk assessments to ensure no major issues are overlooked.
  • Negotiation and Agreement: Based on the findings from due diligence, the buyer and seller negotiate the final terms of the sale, including price, warranties, and contingencies. The parties draft and sign a binding Purchase Agreement.
  • Regulatory Approvals and Financing: If necessary, the buyer seeks regulatory approvals and finalizes financing arrangements. This ensures compliance with legal requirements and secures the funds for the purchase.
  • Closing: The transaction is officially completed. Legal documents are signed, funds are transferred, and ownership of the business is passed to the buyer.
  • Integration and Post-Acquisition Activities: If the buyer is an existing business, the buyer integrates the acquired business into its operations. This includes aligning systems, processes, and cultures while addressing any issues that arise during the transition.

Pre-closing, more deals fall apart than are generally completed, so it’s important to have an experienced partner like Wilson Ratledge by your side to identify any potential issues before they turn into a headache.

The Role of a North Carolina Mergers and Acquisitions Attorney

An experienced attorney helps you navigate every phase of an M&A transaction. From structuring the deal, to mitigating risk, to ensuring compliance with local and federal laws, legal counsel can help protect your interests and ensure you don’t make mistakes during the process.

How Legal Counsel Can Help

  • Deal Structuring: Determining whether the transaction will be a stock purchase, asset purchase, or merger, and how the purchase price will be paid (very few transactions are simple all cash at closing these days) happens at the Letter of Intent stage or before, and it can have significant tax and liability implications. It is vital that you involve legal representation as early in the process as possible to facilitate a smoother process after the Letter of Intent is signed.  Just because the LOI is non-binding does not mean either party should freely materially modify the transaction after the LOI is signed.  Your lawyer, along with other parties such as a banker or financial advisor, can help you understand the practical and tax implications of the different purchase models from the beginning.
  • Contract Drafting and Review: Ensuring all agreements are thorough, comprehensive and tailored to the specific needs of you and your business.  The importance of this piece of M&A cannot be overstated.
  • Risk Mitigation: Identifying potential liabilities and issues during due diligence and addressing them proactively.
  • Closing the Deal: Overseeing the final stages to ensure all documents are signed, the proper flow of funds, and compliance requirements are met.

Start Your M&A Journey With Confidence

Whether you are considering merging with another business, being acquired by or acquiring a competitor, the legal framework surrounding these transactions is complex but manageable with the right guidance. 

At Wilson Ratledge PLLC, we work closely with business owners to protect their interests and help them achieve their strategic goals. Let us help you navigate the legal aspects of buying or selling your company, and position your future for long-term success.

COA Latest Award of Benefits

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Recently, the North Carolina Court of Appeals weighed in on the issue of upholding an award of disability benefits based on employment in Kersey v. Perdue Farms Inc., No. COA24-455 (filed Dec. 31, 2024).

It was an appeal by Defendants from an Opinion and Award by the Commission ordering that Plaintiff receive disability benefits beginning May 5, 2021.

On May 5, 2021, Plaintiff experienced a sharp, electric pain in his neck and shoulder, while manually cranking a gear that required an unusual amount of exertion due to a potential malfunction or inadequate lubrication of the landing gear he was working on. Plaintiff’s claims were denied, and he went on to obtain medical treatment on his own. Plaintiff did not work after the May 5, 2021, injury and Perdue Farms did not offer him any light duty, modified, or full duty return to work options. At hearing, Plaintiff testified that he believed he remained employed by Perdue Farms because he was still using the company’s health insurance and he had not received any termination notification.

On April 6, 2023, a Deputy Commissioner found that Plaintiff had suffered a compensable injury to his neck on May 5, 2021, and awarded indemnity benefits from that date and continuing until Plaintiff returned to suitable employment or further order of the Commission, which was confirmed by the Full Commission.

On appeal, Defendants argued that the Commission erred in finding that Plaintiff remained employed as of the date of the evidentiary hearing, which was rejected by the Court of Appeals in part due to Plaintiff’s hearing testimony. Defendants also argued that work restrictions had not been assigned, which was rejected by the Court of Appeals as one physician noted Plaintiff was “not to drive, operate heavy machinery or make important decisions while taking narcotics, muscle relaxants, or neuroleptic”; a second physician stated Plaintiff should not drive a truck until he was assessed by a surgeon and testified at deposition that he “would have absolutely kept this patient out of work”; and the surgeon subsequently signed an out of work note. In addition, the Court of Appeals agreed with the Commission that Plaintiff’s treating physicians recommended surgery, and his work restrictions were pending the surgery, so it would be unreasonable to expect Plaintiff to seek other employment.

As a result of the above findings, the Court of Appeals found competent evidence to support the Commission’s findings that Plaintiff believed he remained employed by Perdue Farms and no evidence of termination existed; that two physicians placed work restrictions on Plaintiff preventing him from returning to his pre-injury position; and Defendant did not offer Plaintiff suitable employment. Furthermore, there was competent evidence that Plaintiff remained available for work within his restrictions, and given his non-MMI status and continued employment, it was premature for him to seek alternative employment.

Why is this case so important and what does it mean for you?  Contact our workers’ compensation defense team to find out.

Seller Financing Issues When Selling Your Small Business

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Have you ever considered offering seller financing to attract more buyers for your business? It can be a game-changer, opening the door to a wider pool of potential purchasers while helping you secure a higher price. However, seller financing is not without its challenges, and navigating these challenges will help protect your financial interests.

Seller financing—where the seller acts as the lender—is increasingly common in small business sales, particularly when traditional financing options are limited. While this arrangement can provide flexibility and competitive advantages, it also introduces unique risks and responsibilities. Understanding these issues can help you decide whether seller financing is the right choice for you and your business.

What Is Seller Financing?

Seller financing allows a buyer to purchase your business with a down payment, while you finance the remaining balance over a set period. This arrangement often includes a promissory note outlining repayment terms, interest rates, collateral, and default conditions.

Why Do Business Owners Consider Seller Financing?

  • Attract More Buyers: Offering financing can make your business more appealing to buyers who lack the upfront capital.
  • Command a Higher Sale Price: Buyers are often willing to pay a premium for the flexibility of seller financing.
  • Faster Sale Process: With fewer barriers to entry, deals can close more quickly.

Common Seller Financing Terms

Typical seller financing arrangements require:

  • A down payment (usually 10%-30% of the purchase price).
  • Repayment terms spanning 3-7 years.
  • Interest rates slightly higher than bank loans to compensate for the seller’s risk.
  • Collateral consisting of business assets

The Risks of Seller Financing

While seller financing offers significant advantages, it also exposes you to financial and legal risks. A well-structured agreement can help mitigate these concerns.

Risk of Buyer Default

One of the greatest risks is the possibility of the buyer defaulting on payments. This could leave you with an unpaid balance and, potentially, a repossessed business to manage.

Impact on Your Retirement or Future Plans

If you’re relying on proceeds from the sale to fund your retirement or another venture, delayed or missed payments could disrupt your plans.

Legal Complexities

Without clear legal terms, disputes over payment schedules, interest rates, or collateral could arise. Proper documentation is essential to safeguard your rights.

Protecting Yourself When Offering Seller Financing

When offering seller financing in a business acquisition, there are a couple of steps you should take to protect yourself from potential risks. 

The first step is conducting thorough due diligence on potential buyers. This involves reviewing their financial history, creditworthiness, and business experience to ensure they have the capability to meet repayment obligations. 

Additionally, requiring collateral—such as business assets or personal guarantees—can provide security and give you recourse in the event of a default. 

Working with a lawyer to draft a comprehensive agreement is critical to help you clearly outline repayment terms, interest rates, penalties for default, and collateral requirements to ensure all parties are appropriately responsible and protected. 

Lastly, understanding the tax implications of seller financing can help you prevent a surprise tax bill in the future. While it may offer benefits, such as spreading capital gains over several years, it can also introduce complexities related to immediate income recognition on depreciation recapture and “hot assets” (like inventory, accounts receivable, and others). 

We’re Here to Help

Wilson Ratledge business attorneys can help you navigate these issues,  safeguard your interests and set the stage for a successful transaction.

Whether you’re preparing to sell your business or need assistance structuring a financing arrangement, our team is here to guide you every step of the way. If you’re ready to take the next step, contact us today to discuss your goals.