From its office in Clayton, Missouri, Danna McKitrick, P.C., delivers legal representation to new and growing businesses, financial institutions, non-profit and government-related entities, business owners, individuals, and families throughout the greater St. Louis region and the Midwest.
Danna McKitrick attorneys practice across many areas of law, both industry- and service-oriented.
Part 5.2 of a 5-part series: Options for Small Business Owners in Financial Distress
Your company’s Chapter 11 bankruptcy has been filed and you’re now running your business under the provisions of the United States Bankruptcy Code.
It’s now time to work toward the ultimate goal of a Chapter 11: a Plan of Reorganization, confirmed by the court, allowing your company to restructure its debts, exit Chapter 11, and continue in business. It is important that you explain all of your concerns about all aspects of your business to your attorney and provide complete and accurate information, all before you even file the case. This will help both of you develop good ideas for successfully navigating your reorganization case and getting a plan confirmed. Advise your attorney if a new problem develops so you can consider all the potential solutions available to you.
Your next steps in planning for reorganization will include you and your attorney:
Participating in two mandatory meetings with a U.S. bankruptcy trustee within the first 30 days after filing and begin filing monthly operating reports.
“Initial debtor interview:” Learn procedural issues such as the ins and outs of filing periodic operating reports such as monthly operating reports and where and how your company can bank.
Section 341 “meeting of creditors:” Be questioned under oath by the U.S. trustee’s office about your need to file Chapter 11, your plan to exit bankruptcy, how you will implement your ideas, etc. This meeting is open to all interested parties.
Negotiating the terms of your proposed plan with the creditors’ committee if one has been formed by large unsecured creditors.
Negotiating lease terms. Any lease which commenced prior to the filing can be “rejected.” You can then renegotiate the terms or terminate the lease, in which case the lessor’s claim will be treated as a pre-petition claim.
Treating an equipment lease as an installment purchase agreement secured by the equipment, possibly converting a portion of the secured debt to unsecured and altering the terms of repaying the secured debt.
Businesses are to avoid potentially deceptive conduct that would confuse consumers under Section 5 of the Federal Trade Commission Act, and the FTC is now focusing very heavily on deceptive customer reviews and endorsements. Deceptive conduct includes any conduct which treats positive and negative reviews unequally, thus misleading consumers of useful information and inflating the product’s star rating.
In one of its first cases, the FTC pursued Fashion Nova, LLC, a fast fashion retailer that attempted to conceal negative reviews. According to the complaint, “Fashion Nova used a third- party online product review management interface to post four- and five-star reviews and hold off on lower star reviews [estimated in the hundreds of thousands] for the company’s approval.” Fashion Nova never approved or posted the lower star reviews. In its settlement with the FTC, Fashion Nova is prohibited from suppressing customer reviews of its products and is required to pay $4.2 million to settle the FTC’s allegations.
What does this mean for businesses that use or consult regarding consumer reviews? Continue reading »
Part 5.1 of a 5-part series: Options for Small Business Owners in Financial Distress
Your attorney has just filed your company’s Chapter 11 reorganization case and you have no clue what to do next. Seriously, the first thing you should do is nothing. Take a breath and keep running your business.
That’s not to say there’s nothing for you to do during the entire Chapter 11 process – there’s actually quite a lot for which you will be responsible. Any competent bankruptcy attorney already has discussed your statutory and practical responsibilities in a Chapter 11 case with you prior to filing.
Now is the time to implement those decisions made before the case was filed. If you forget a decision you made (or come across an issue you hadn’t discussed), call your attorney. The two of you should be in frequent contact during the case to be sure that you don’t take any actions which don’t make sense in the Chapter 11 context, or which might violate the Bankruptcy Code, Bankruptcy Rules, or Local Rules.
Your primary concern after the case is filed is, of course, money to operate with. That topic should be discussed thoroughly with your attorney prior to filing. Be sure your attorney discusses post-petition financing and use of ‘cash collateral’ with you. Be sure that you have post-petition financing lined up before you file, either from internal operations or from a lender. If your post-petition financing falls through, or you’re not as profitable as you expected to be after filing, you may not be able to afford to operate during the Chapter 11. If so, there is no way for you to reorganize and your Chapter 11 case may be dismissed outright. Continue reading »
Every state has a statute authorizing the counties within it to foreclose on or sell real estate which has delinquent taxes owed on the property. In Missouri, for instance, counties are allowed to conduct sales of such properties once the real estate taxes have been delinquent for three years. The exact procedure may vary from county to county.
The purchaser at a tax sale will likely pay much less than the property is worth. If the previous owner should file a bankruptcy case, can the bankruptcy court set aside the sale as “fraudulent,” in the sense that the property was transferred from the owner for less than the true value of the property?
In 1994, in BFP v. Resolution Trust, 511 U.S. 531, the U.S. Supreme Court ruled that properly conducted mortgage or Deed of Trust foreclosures cannot be fraudulent transfers because, although it is very rare for a foreclosure sale price to be anywhere close to a market price, notice of the sale is published and members of the public can attend the sale and purchase the property if they care to.
However, the fraudulent transfer question is much closer if the transfer is by tax sale. The notice of the sale is narrower than even a mortgage foreclosure, and the chances of the property selling for a fair value is even less.
So, can a sale or foreclosure for delinquent taxes be set aside as constructively fraudulent? This question has given rise to a split among the Circuits. The Sixth Circuit, in the recent case of Lowry v. Southfield Neighborhood Revitalization Initiative (In re Lowry), 20-1712 (6th Cir. Dec. 27, 2021), found that the BFP reasoning did not apply to tax sales. This brought the circuit split even, with three circuits (the Fifth, Ninth and Tenth) finding that BFP does apply to tax sales and three circuits (the Third, Sixth and Seventh), holding that it does not.
Authored by Katherine M. Flett with assistance from Haley E. Gassel, contributor
Missouri employers must now provide unpaid leave and accommodations to employees due to domestic or sexual violence under the Victims’ Economic Safety and Security Act (VESSA).
Employers Covered Under VESSA
Employers with 1-19 employees are not subject to these requirements.
Employers with 20-49 employees are required to provide one week of unpaid leave per year to employees covered under these statutes.
Employers with 50 or more employees are likewise required to provide two weeks of unpaid leave per year to employees covered under these statutes.
Employees Eligible for Unpaid Leave or Accommodations under VESSA
VESSA applies to employees of covered employers who are victims of domestic or sexual violence, or whose family or household member is a victim of domestic or sexual violence. A family or household member is a spouse, parent, daughter, son, someone related by blood or by marriage, someone who shares a relationship through a son or daughter, and anyone jointly residing in the same household.
Reasonable Accommodations
Employers and public agencies are required to make reasonable safety accommodations to the known limitations resulting from circumstances relating to being a victim of domestic or sexual violence or a family or household member of domestic or sexual violence. Reasonable accommodations include: Continue reading »
Missouri has its first decision on a challenge to a private company’s COVID-19 vaccine mandate. The U.S. District Court of Western Missouri heard a petition for an injunction against Tyson Foods’ COVID-19 vaccine mandate and the company prevailed. In Reese v. Tyson Foods, Inc., Clifton Reese, a Tyson Foods employee, had requested a Temporary Restraining Order and/or Preliminary Injunction against Tyson Foods regarding its COVID-19 vaccine mandate.
In Reese, Tyson announced a vaccine mandate that all employees nationwide to be fully vaccinated by specified dates. The policy stated that employees seeking religious or medical accommodations should contact Tyson human resources “immediately.” Clifton Reese waited a month before making his request for religious accommodation. He refused the company’s accommodation of unpaid leave, but Tyson formally notified Reese that his religious accommodation was granted with the following stipulations:
The accommodation status could change at any time.
Because his accommodation of unpaid leave of absence was not job-protected, the position could be filled if necessary.
If providing the accommodation was an undue hardship to the employer, the accommodation could be revoked. The employee would then have to comply with the mandate or be subject to termination.
Reese filed a complaint with the Missouri Human Rights Commission and sent a demand letter to Tyson to continue his employment under existing COVID-19 restrictions to receive his full bonus, salary, and benefits. During the hearing, the Reese admitted he did not understand benefits he would receive during unpaid leave, such as continuation of health benefits, the ability to look for new employment within or outside of the company, and keeping earned bonuses. Continue reading »
Recently, Clifton Reese, an employee of Tyson Foods, requested a Temporary Restraining Order and/or Preliminary Injunction against his employer regarding its COVID-19 vaccine mandate in Reese v. Tyson Foods, Inc.
On August 3, 2021, Tyson Foods announced a vaccine mandate which required all employees nationwide to be fully vaccinated by specified dates. Moreover, the policy requested that employees seeking religious or medical accommodations contact human resources “immediately” to allow Tyson time to consider each employee’s request to meet company deadlines. Despite the notification to contact human resources immediately, Reese waited a month before contacting human resources seeking a religious exemption.
In response to his request, Tyson offered Reese an accommodation of an unpaid leave of absence, which he rejected. Tyson then confirmed Reese’s request for a religious exemption from the company vaccine mandate had been granted, the status of the accommodation was subject to change, and if the accommodation was an unpaid leave of absence that was not job-protected, “it may be necessary to fill your position.” Tyson also explained that if providing the accommodation was an undue hardship to the company, the accommodation could be revoked, and Reese would have to either comply with the mandate or be subject to termination.
In response to Tyson’s confirmation of the accommodation, Reese filed a complaint with the Missouri Commission of Human Rights. Reese hired an attorney and sent a demand letter to Tyson demanding that Tyson continue Reese’s employment “with the already existing COVID-19 restrictions in place,” and that he receive his full bonus, salary, and benefits. Tyson said they would review the demand. Continue reading »
With continued and widespread COVID-19 infection and the FDA’s full approval of the Pfizer-BioNTech COVID-19 vaccine, many employers have instituted COVID-19 vaccination mandates. Title VII requires employers to provide reasonable accommodations for employees with sincerely-held religious beliefs that conflict with getting vaccinated. Given that religious beliefs are difficult to disprove, many employees have taken this as an opportunity to request religious exemptions to avoid COVID-19 vaccination mandates.
The Law – Title VII
Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of religion and requires employers to provide reasonable accommodations to employees claiming their sincerely-held religious beliefs conflict with getting vaccinated. Title VII protects not only people who belong to traditional, organized religions, such as Buddhism, Christianity, Hinduism, Islam, and Judaism, but also others who have “sincerely-held religious, ethical or moral beliefs.”
Given this sweeping definition of religion, the U.S. Equal Employment Opportunity Commission (“EEOC”) has cautioned that an employer should generally assume that an employee’s request for a religious accommodation is based on a sincerely-held religious belief. Nevertheless, an employer is permitted to question the sincerity of an employee’s purported religious belief where there is an objective basis for doing so. Further, an employer is not required to accommodate an employee’s religious beliefs and practices if doing so would impose an “undue hardship” on the employer’s legitimate business interests. For the EEOC’s list of factors to be considered when determining whether an accommodation imposes an undue hardship on an employer, visit: EEOC Undue Hardship.
The EEOC’s Guidance on Religious Exemption Requests
On October 25, 2021, the EEOC updated its technical assistance related to the COVID-19 pandemic, which included additional guidance on how employers should handle religious exemption requests (Section L). Read the full EEOC update here.
The key takeaways are:
Employees who have a religious objection to receiving a COVID-19 vaccination must inform their employer and request a reasonable accommodation to be afforded protection under Title VII. Reasonable accommodations may include telework or reassignment.
If an employer has an objective basis for questioning either the religious nature or the sincerity of a particular belief, the employer can make a limited factual inquiry seeking additional supporting information.
An employer who objectively demonstrates that it would be an “undue hardship” to accommodate an employee’s request for religious exemption to the employer’s vaccination mandate is not required to provide the accommodation.
An employer is not required to grant all employees’ requests for religious exemptions on the basis that it has granted some employees requests for religious exemptions. The determination is fact-intensive and specific to every request.
While an employer should consider the employee’s preference, if there is more than one reasonable accommodation that would resolve the conflict between the vaccination requirement and the religious belief without undue hardship, the employer may choose which accommodation to offer.
An employer has the right to discontinue a previously granted religious accommodation. If the employer learns that the belief is not religious in nature or sincerely-held, or if the accommodation becomes an undue hardship, the employer can discontinue the accommodation.
Due to the pandemic and labor shortage, Missouri courts have not had an opportunity to consider Amendment 2 and employment issues related to medical marijuana in the workplace. Amendment 2 allows state licensed physicians to recommend medical marijuana to patient employees diagnosed with chronic debilitating conditions. It also protects employees with a medical marijuana card issued by the Department of Health and Senior Services (DHSS) from being terminated unless the employer proves that the employee is “under the influence of marijuana.”
There are no reliable tests available yet to scientifically confirm if someone is “under the influence” of marijuana. A person will test positive for marijuana for up to 25 days after use. However, there are impairment tests on the market that can help determine whether workers in safety-sensitive positions are at risk by testing current fitness for duty. Those tests include computer-based alertness tests similar to a video game and apps that test for cognitive and motor impairment. Some tests take 20 seconds and are advertised as testing for fatigue, dehydration, emotional distress, alcohol, cannabis, etc.
Without more guidance, employers will have to create Observed Behavior tests that are signed by company personnel to bolster an argument of “under the influence.” Further, because Amendment 2 is a constitutional amendment, it would necessarily trump existing Missouri law found in laws such as workers’ compensation and unemployment statutes.
Another possible employee defense is an Americans with Disabilities Act (ADA) defense where the employee is taking physician-prescribed medical marijuana for a chronic debilitating condition that is protected by the disability laws. Missouri has no case law at this time. U.S. case law trends are that when courts are asked to apply federal law (the ADA) versus state law (i.e., Missouri Human Rights Act), federal courts are not finding a protected disability due to the employee using an illegal drug. Continue reading »
Authored by Katherine M. Flett with assistance from Haley E. Gassel, contributor
On August 13, 2021, Governor JB Pritzker signed SB 672 into law, amending the Illinois Freedom to Work Act, the state’s restrictive covenant statute. Going into effect on January 1, 2022, the new bill will only apply to restrictive covenants entered into on or after January 1, 2022.
Compensation Thresholds
In SB 672, the Illinois legislature reserved non-compete and non-solicit agreements for higher paid employees. The law prohibits employers from imposing non-compete agreements on employees earning less than $75,000 annually or non-solicitation agreements on employees earning less than $45,000 annually. Earnings are defined broadly to include compensation, salary, bonus, commission, or any other form of taxable compensation on the employee’s W-2 plus any elective deferrals. These salary thresholds will increase over time, beginning in 2027.
Other Prohibitions
SB 672 includes a special provision for employees furloughed or laid off “as the result of business circumstances or governmental orders related to the COVID-19 pandemic” or under similar circumstances. A non-competition or non-solicitation agreement may not be entered into under these circumstances unless enforcement of the agreement provides for “compensation equivalent to the employee’s base salary at the time of termination for the period of enforcement minus compensation earned through subsequent employment during the period of enforcement.”
Non-competition and non-solicitation agreements are illegal for non-managerial or non-administrative employees in construction or employees covered by collective bargaining agreements under the Illinois Public Labor Relations Act or the Illinois Educational Labor Relations Act.
Employees’ Rights
If an employee is not advised by the employer in writing to consult with an attorney before entering into a non-competition and non-solicitation agreement, the agreement is invalid. Likewise, if an employee does not receive a copy of a non-competition and non-solicitation agreement before starting employment or with at least 14 days to review the covenant, the agreement is invalid. The employee may sign the agreement before the 14-day period has ended.
An employee that successfully defends against an employer’s enforcement of a non-competition or non-solicitation agreement not to solicit shall recover from the employer all costs and reasonable attorney’s fees, along with any other appropriate relief.
Requirements for a Restrictive Covenant to be Valid
Part 5.2 of a 5-part series: Options for Small Business Owners in Financial Distress
Businesses are to avoid potentially deceptive conduct that would confuse consumers under 
Every state has a statute authorizing the counties within it to foreclose on or sell real estate which has delinquent taxes owed on the property. In Missouri, for instance, counties are allowed to conduct sales of such properties once the real estate taxes have been delinquent for three years. The exact procedure may vary from county to county.
Missouri employers must now provide unpaid leave and accommodations to employees due to domestic or sexual violence under the 
Missouri has its first decision on a challenge to a private company’s COVID-19 vaccine mandate. The U.S. District Court of Western Missouri heard a petition for an injunction against Tyson Foods’ COVID-19 vaccine mandate and the company prevailed. In 
With continued and widespread COVID-19 infection and the FDA’s full approval of the Pfizer-BioNTech COVID-19 vaccine, many employers have instituted COVID-19 vaccination mandates. Title VII requires employers to provide reasonable accommodations for employees with sincerely-held religious beliefs that conflict with getting vaccinated. Given that religious beliefs are difficult to disprove, many employees have taken this as an opportunity to request religious exemptions to avoid COVID-19 vaccination mandates.
