News

USCIS and DOS Announce Changes to Permanent Residence Application Process

On September 9, 2015, USCIS announced that in conjunction with the Department of State (DOS), it is revising the procedures for determining when an application for adjustment of status may be filed.  This change implements part of President Obama’s November 2014 executive actions on immigration.  The change will begin with the Visa Bulletin for October 2015.  There are two important dates listed on the monthly Visa Bulleting:  the “filing date” that determines when individuals can submit their permanent residence applications, and the “final action” date that indicates when DOS or USCIS can make a decision on the applications.

USCIS Guidance on Amended H-1B Petitions

On April 9, 2015, the Administrative Appeals Office (AAO) issued a precedent decision, Matter of Simeio Solutions, LLC, in which it held that a change in the place of employment of an H-1B visa employee to a geographical area requiring a new certified Labor Condition Application (LCA) is a “material change” for purposes of 8 CFR §§214.2(h)(2)(i)(E).  Previously, an employer was only required to obtain a new certified LCA and comply with U.S. Dept. of Labor posting requirements at the new geographical area of employment.  Now, according to Simeio, the employer is required to also file an amended H-1B petition with the U.S. Citizenship and Immigration Services (USCIS).

 

USCIS has provided guidance instructing employers to file amended petitions for H -1B employees who have changed or are going to change their place of employment to a worksite location outside of the Metropolitan Statistical Area (MSA) or “area of intended employment” covered by the existing H-1B petition, regardless of whether a new LCA has been certified and posted at the new location.

 

For H-1B employees who changed work locations prior to the issuance of Simeio, employers are given 90 days (until August 19, 2015) to file amended petitions.  Although this appears to be retroactive rulemaking, USCIS’ position is that the regulatory interpretation announced in Simeio clarifies but does not change USCIS’ longstanding policy.  Consequently, USCIS proposes to apply the rule to impose sanctions and penalties upon employers and employees for violations pre-dating the decision after August 19, 2015.

 

It is important for employers to make a good-faith effort to avoid potential penalties for failure to comply with USCIS’ guidance on amended H-1B petitions.  Employers and individuals who have concerns about whether their LCA and H-1B petition(s) are complete and proper, should speak with a qualified immigration attorney.  In these situations, it is often best to arrange for an internal audit of the employer’s files to allow employers to identify and to the extent possible, address any possible violations.

 

Employers and individuals with further questions about this guidance should not hesitate to contact our offices at 312.422.8000.

Pregnancy Accomodations

On January 1, 2015, a new provision of the Illinois Human Rights Act will become effective:  requiring all employers to give pregnant employees “reasonable accommodation” in their jobs.

“Reasonable accommodation” is a phrase most associated with disability in employment law. However, the term “disability” does not generally apply to pregnancy. So this revision to the Human Rights Act is notable in two respects:  it covers every employer, and it specifically requires accommodation for pregnancy and childbirth. Illinois is one of only a handful of states that have enacted this type of protection at this time.

The Act requires that employers make requested reasonable accommodations for employees that pose no “undue hardship” to the employer. In addition, the act covers employees who need accommodations due to “pregnancy, childbirth, or medical or common conditions related to pregnancy or childbirth,” so even issues that come up after the birth of a child will qualify for accommodation – such as breastfeeding.

Changes and updates to the law governing employment is always a good reminder to review your policies – especially your employee handbook. One of the best protections an employer can have is a handbook, but it can be a liability if it is out of date or does not accurately reflect the law. Just like any asset of your business, it is important to monitor and periodically update your handbook. Review and updating is also an opportunity to refresh the policy in the minds of your human resources personnel, or whomever has the responsibility of enforcing the policies.

Between now and the new year is a great time to get a full “check up” on your handbook and ensure that you start 2015 with the most current policies and protections for your business. Whether you only need the addition of the new accommodation law, or are starting from scratch and need an entire handbook, we would be happy to assist you all your employment policy requirements as well as answer any questions you might have about the impact of the new law. Please feel free to let us know how we can help.

 

Southern Financial Group, LLC v. McFarland State Bank

Southern Financial Group, LLC v. McFarland State Bank

Southern Financial Group (“SFG”) is a firm that specializes in purchasing distressed assets for investment.  SFG bought at auction a loan portfolio from McFarland State Bank (“McFarland”) which McFarland had previously acquired from Evergreen State Bank.  The Loan Sale Agreement (the “Agreement”) included representations that “no material portion” of the “Collateral” (which consisted of 19 properties in the portfolio) had been released nor had McFarland executed any document which would give that effect.  The Agreement also contained provisions limiting remedies available to SFG for non-monetary breach by McFarland.  Special, punitive and consequential damages were eliminated.  In the event of a breach, and at McFarland’s option, McFarland could either repurchase the “Loan” or pay SFG’s actual damages in accordance with the formula set out in the Agreement.

As it turned out, three of the 19 properties had been released.  Subsequent to discovering this, SFG also sold 13 of the remaining 16 properties at a profit over the portfolio purchase price which it had bought at approximately 28 cents on the dollar.

SFG sued for breach.  The appeals court upheld the summary judgment by the magistrate judge that SFG was not entitled to damages because it had not actually suffered any and that the provision limiting remedies had not failed its essential purpose.

The 7th Circuit looked at the following factors:  (1) SFG was a sophisticated party and not unused to these kinds of transactions or contracts, and (2) the parties contracted to allocate the risk of the transaction.

With respect to the essential purpose of the limitation on remedies, the Court noted that the test is not whether a party gets no relief but whether a party does not get the benefit of the bargain from the remedy(ies) available.  In this case, SFG made a profit after having sold 13 properties and therefore, received the benefit of its bargain with McFarland.

What is the lesson for lenders?  First, if you are the purchaser of a portfolio, do your due diligence.  The case does not make clear if SFG checked title on the 19 properties or if it simply relied on the background material from McFarland’s agent.  And second, whether you are the purchaser or seller, be sure you can live with the remedies under the contract.  Bear in mind, however, that the remedies may be tied to the purchase price, i.e., if the risk allocation is greater for seller, the price may be greater.  Conversely, risk allocation may also be a means to lower the price if purchaser is willing to take on more of the risk.

Southern Financial Group, LLC v. McFarland State Bank, 763 F. 3d 735 (2014)

How a Non-Recourse Loan can become a Recourse Loan

TITAN LEASING

How a Non-Recourse Loan can become a Recourse Loan

Simply stated, a non-recourse loan is an arrangement where the borrower pledges collateral as security for the loan, and the lender’s only recourse in the event of default by the borrower is to foreclose on the collateral.  This protects the borrower from any personal liability in the event of default.  However, it appears that the non-recourse protection might not be absolute.

The Seventh Circuit Court of Appeals held in Wells Fargo Equipment Finance, Inc. v. Titan Leasing Inc., that a breach by the borrower as to warranties in the security agreement created personal liability for the borrower for the balance of the note.

As collateral for a loan from Wells Fargo Equipment Finance, Inc. (‘Wells Fargo”), Titan Leasing, Inc. (“Titan Leasing”) pledged a lease agreement for a locomotive between Titan Leasing and Gerdau Ameristeel (“Ameristeel”).  In the security agreement, Titan Leasing made several warranties to Wells Fargo, including that Ameristeel had acknowledged acceptance of the locomotive from Titan Leasing.

In reality, while the locomotive was in fact delivered to Ameristeel, Ameristeel was unsatisfied with the condition of the locomotive and expressly rejected it.  However under the terms of the lease agreement, “Shipment of the locomotive to Lessee” constituted both formal acceptance of the locomotive and acknowledgement that the locomotive met delivery specifications.  Relying on this language, Titan Leasing claimed that Ameristeel had acknowledged acceptance of the locomotive and therefore no warranty was breached.

The Appellate Court instead focused on the intended meaning of “acceptance” under the security agreement between Wells Fargo and Titan Leasing, rather than the language in the lease agreement.  The Appellate Court found that under the terms of the security agreement, Wells Fargo was relying on the representation that Ameristeel was in fact satisfied with the locomotive and would therefore be making lease payments under the lease. Titan Leasing knew that Ameristeel had expressly rejected the condition of the locomotive, and therefore misrepresented that warranty to Wells Fargo.  Due to that misrepresentation, the Appellate Court held that Titan Leasing had to repay Wells Fargo.

Significantly, the Court did not distinguish between an intentional misrepresentation and an innocent misrepresentation.  It can therefore be inferred that potentially any misrepresentation of a warranty could be enough for a borrower to be personally liable under a non-recourse loan.

Accordingly, when dealing with a borrower who has defaulted on a non-recourse loan, pay careful attention to the warranties that the borrower gave with respect to the collateral.  A misrepresentation by the borrower with respect to the warranties might allow you to get personal recourse against the borrower.

 

Timing is Everything

IN RE: DUCKWORTH

Timing is Everything

Occasionally, lenders insert erroneous dates in loan documents.  Sometimes closing dates change and a reference to the wrong date of a promissory note in a security agreement makes its way into the executed document.  This is most likely when using form documents.

In a 2014 Seventh Circuit (Illinois’ Federal Circuit) decision, the appellate court considered the bankruptcy case In Re: Duckworth.  In Duckworth the facts are simple.  The security agreement for the loan referenced a note dated December 13 when the note was actually dated December 15.

The question before the court was whether it could review evidence relative to the proper date from facts existing outside the loan documents.  For example, could the court consider commitment letters or emails or bank financial records to determine whether it was intended for the note to actually be secured by the security agreement?

Indeed, the court held it could not!

The court concluded that it could only consider what is actually written in the signed loan documents.  The basis for the finding was the protection of lenders who subsequently purchase the initial lender’s rights in the paper.  A future purchaser of the debt should be able to understand the story of the loan relying on the deal documents alone.  Otherwise, the salability of loans might be impacted negatively because there would be less certainty surrounding regarding the enforceability of the documents.

 

Accordingly, always be careful to properly date loan documents.   It is not uncommon for dates to be hidden in the body of a document (instead of at the front or back).  This is also true for other items that may change as you get closer to closing such as dollar amounts and financial covenants.

 

 

Department of Homeland Security Announces Certain Spouses of H-1Bs will be Eligible for Work Authorization

Certain Spouses of H-1Bs will be Eligible for Work Authorization

Today, USCIS Director Leon Rodriguez announced that the agency will begin to extend employment authorization to the H-4 spouses of certain individuals with H-1B status who are seeking U.S. Permanent Residence.  Extending authorization to these individuals is one of several initiatives undertaken by USCIS as part of its efforts to modernize, improve, and clarify U.S. visa programs.

Who is Eligible?

Individuals eligible will include the H-4 spouses of individuals in H-1B status who have Immigrant Petitions (I-140s) approved on their behalf.  Also eligible will be the spouses of certain individuals who have had their H-1B status extended beyond the usual six year limit because they were going through the permanent residence (green card) process.

How and when should individuals apply?

Qualifying individuals in H-4 status will not be considered to be “employment authorized incident to status,” meaning that they will have to affirmatively file for employment authorization and have that application approved before being eligible to work.  The USCIS will begin accepting the applications on May 26, 2015, and it is expected that these applications will take approximately 90 days to be processed.

Individuals and companies with further questions about this new program should not hesitate to contact our offices at 312.422.8000.

LLF’s Puneet Cham Sits Down With MeetAdvisors

Puneet Cham, Attorney at Latimer, LeVay, and Fyock sits down with MeetAdvisors to discuss Estate Planning.

H-1B Alert – Cap Season is Upon Us!!

H-1b Employment Authorization

Cap SEASON IS APPROACHING!!

visa-small

OVERVIEW

If you are an employer intending to sponsor H-1B employees currently in the U.S. in another status, or outside of the U.S., now is the time to begin the application process.

The United States Citizenship and Immigration Service (USCIS) is only authorized to issue 65,000 H-1B employment authorizations every fiscal year.  An additional 20,000 H-1Bs are available each fiscal year to individuals who possess a U.S. Master’s Degree or higher.   Petitions can be filed as early as April 1 of the prior fiscal year in order to maximize the likelihood of acceptance of the petition for the next fiscal year.  Last year, the USCIS received more than the designated allotment of H-1B petitions in the initial five day acceptance period, and had to conduct a “lottery” to randomly determine which H-1B petitions would be adjudicated.  To guarantee that your petition gets accepted in the lottery, it is crucial to have your petition filed on April 1.

H-1B employment authorization is one of the most common ways for companies to sponsor foreign nationals to work in the U.S.  This classification is for professionals employed in a “specialty occupation” or as a fashion model of distinguished merit and ability.

In order to move forward with an H-1B petition, there are a number of tasks that must be completed, including (i) completion of Latimer LeVay Fyock LLC’s questionnaire containing all of the information necessary to prepare the petition materials, (ii) a review of the prospective employees’ educational documents and background, (iii) preparation of a proposed job description and proposed salary for each position, and (iv) filing a Labor Condition Application  with the U.S. Department of Labor, a process that requires approximately 7 business days.

Certain employers are not subject to the H-1B cap.  Those include governmental research organizations, non-profit research organizations, institutes of higher education, and non-profit organizations affiliated with institutions of higher education.  Additionally, there are certain exceptions to the H-1B cap that apply to individuals,  including certain individuals who have already been counted against the H-1B cap, individuals seeking an amendment, extension or transfer of their current H-1B employment authorization, and certain physicians under the CONRAD State 30 program or receiving a federal government agency waiver.

Please contact our offices if you would like to discuss further the process for sponsoring foreign national employees so they can properly and timely work for your company in the U.S.

 

EB-5 Investor Visa Overview

Latimer LeVay Fyock LLC

Overview

An EB-5 immigrant investor visa may be an attractive option for a high net-worth individual. This visa allows a person and his or her family to obtain U.S. permanent residence through investment in an enterprise that they form on their own, or in a commercial entity created by other individuals. There is no quota or waiting list for individuals to obtain permanent residence through the EB-5 program, meaning that this may be faster than other options.

The EB-5 classification requires an investment of $1 million, or $500,000 in a high unemployment or rural area. The investment must be in a commercial enterprise that will create or preserve at least ten full-time jobs for U.S. workers within two years, or within a reasonable time-period after the two years in certain very limited circumstances. Individuals approved for EB-5 classification are granted conditional permanent residence for a two year period, and that status can be made permanent at the end of that two year period if the investment in the investment continues and the requisite jobs have been created.

In addition to investing in an entity that was created by the investor, the USCIS has set aside certain EB-5 visas for individuals investing on “Regional Centers” which are entities that have been designated by USCIS as investments that will create the necessary ten jobs per investor. Most of these regional centers are in areas where $500,000 is the required level of investment. A key element of the EB-5 immigrant investor petition will be documenting the lawful source of the investment funds. Under the EB-5 regulations, the investment funds can come from a number of sources, such as business ownership, selling property, inheritance, gifts, loans, or other sources. Substantial documentation must be presented to show that the funds derived from lawful, rather than unlawful sources. The documentation that is used to document the lawful source of funds will vary, depending on the source of those funds.

Related to showing the lawful source of funds, the investor will need to be able to show the path of those funds from the investor into the commercial enterprise. Sometimes documentation of the path of funds will be as simple as the wire transfer from the individual’s bank account into the account of the commercial enterprise. Other times, the documentation can be particularly complex, especially in countries with restrictions on outbound currency transfers. In these cases, it may be required to show the path of the currency transfers through multiple parties.

Because of the restrictions on the types of investments that will qualify, and the heavy documentation burdens, the EB-5 investor visa might not be appropriate in many situations. However, for a number of investors this has proven to be an attractive option when other options are not appropriate. Our experience in dealing with the multitude complex issues involved can be valuable in guiding potential investors through this process.

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