My Very Own WBE

I’ve counseled many businesses on becoming woman-owned business enterprises (WBEs) or minority-owned business enterprises (MBEs). Now it’s my turn to apply for WBE status for Bloom & Bloom, LLC.

Applying for WBE status makes sense for this firm because we’re focused in part on Philadelphia real estate matters. The City of Philadelphia sometimes bids out agreements for legal services. Philadelphia has WBE and MBE participation goals for many, if not all, contracting opportunities, so certifying will permit us to bid on those projects.

Just as important, in applying for a WBE, I will be able to get a client’s perspective on the WBE application process. Up to now, my participation has been as a lawyer, advising a client on how best to convey his or her essential involvement in the business. Now as Managing Member, I’ll be acting as my own advocate in this application, describing my startup process, my financial contributions, my sweat equity, and my management of the firm.

Perhaps it’s true that one who represents herself has a fool for a client. But I hope that soon enough, I’ll report that Bloom & Bloom, LLC is a WBE.

Think before you post!

Social media is so pervasive that it’s sometimes difficult to determine what not to post.  Often, people refrain from posting family photos or vacation plans due to safety concerns. But that’s not the only danger of posting information to social media. Posts can also affect the outcome of a legal representation.

For example, let’s say that a business, “Orlando’s HVAC, Inc.,” contains short bios of its employees. Of one employee, owner Orlando posts, “Ernie’s work is always solid, and he’s so reliable my customers ask for him by name!” Later, Ernie is terminated from Orlando’s HVAC, Inc. Orlando says Ernie was fired for poor workmanship; Ernie claims that it was his age, and that Orlando made comments on how old Ernie was getting before Ernie was let go. Ernie may use Orlando’s previous glowing review of his work to show that his purported poor workmanship was simply a pretext and he was the victim of age discrimination.

Websites and social media sites are often the target of discovery by opponents exploring litigation. Husbands post photos of themselves and their girlfriends, only to be confronted by the information during divorce proceedings. Family members disclose confidential settlement terms, risking censure or even breach – perhaps even undoing the settlement altogether. The information is extremely easy to find with fairly simple searches. And even if the website is changed or a post is deleted, the information still exists and may be able to be retrieved by tech-savvy counsel.

Clearly, refraining from posting is the best solution. If you can’t avoid posting information, review it with a critical eye. Does it reveal any type of confidential or sensitive information? Could it be misconstrued? If the information were always retrievable, would you mind?

To learn more about how specific posts might affect your business, contact us.

How can I perfect my great idea when I have to spend so much time managing my business?

A small business starts out with a great idea – a product, a service, or a particular expertise – and a driven organizer.  However, having a great idea is very different from running a business, and an organizer might find himself spending more time running the business than executing his idea.  It can be very frustrating to sacrifice time and energy into the business side, instead of promoting the great idea. 

Taking just a few minutes each week to run your business efficiently can maximize earnings and make things simpler at tax time.  Here are just a few ideas for taking care of your business, even if you’re not a business maven.

  • Issue invoices promptly.  Clients and customers sometimes have short memories.  They might remember work you did for them a few days ago, but forget work you did a few months ago – and worse yet, might refuse to pay or demand a discount. Getting invoices out closer to the time the work is finished can sometimes result in a better rate of return for the work.  
  • Keep receipts.  Keep receipts for office expenses that you pay out of pocket, whether they be marketing, rent, supplies, or equipment purchases.  Also, keep track of your travel costs – the site,-Medical-and-Moving-Announced (last visited October 27, 2014) offers the 2014 IRS rate for travel costs.  These costs may be reimbursable on the company’s earnings, and might be payable before the end of the tax year.
  • Open a tax escrow account.  Here in Philadelphia, business owners may be responsible for Federal, state, and several types of City taxes – including net profits, business privilege, and wage taxes.  In order to ensure that all obligations are covered, consider opening a tax escrow account and ensuring that at tax time, there is enough to cover all taxes.
  • Create a balance sheet.  A balance sheet will let you track the business’s revenues against its overhead.  Banks or other funding sources often demand to see balance sheets before lending money.  Over time you’ll be able to track your business’s growth and predict future earnings, anticipate when to replace equipment, and determine whether to hire personnel.

Having your own business can be immensely rewarding, and with a bit of forethought and attention, perfecting and promoting your great idea can take precedence over running the business.  If you have questions, feel free to give us a call so we can help your business bloom.

Did I really agree to anything when I clicked “I AGREE?”

If you use online or device-based software, you almost certainly clicked “I AGREE” to the terms and conditions in order to purchase or use it.  And if you’re like most people, you probably didn’t read all of the terms and conditions before you clicked.  So if you didn’t read it, did you really agree to the terms and conditions?  And what could they mean?

If you click “I AGREE” to software installation or use, you accept every one of those terms and conditions, whether you would normally agree to them or not. The terms and conditions are, in essence, a contract which each user agrees to honor, and clicking “I AGREE” is equivalent to your signature. Most terms and conditions are fairly innocuous, but there are some provisions that some of us would find objectionable. Online payment software, for example, often permits users’ demographic information to be shared, requires disputes to be arbitrated (not litigated) in far-flung locales, and even permits the company to report users’ income over a certain threshold that comes through the software to the IRS.

So, if you disagree with the terms and conditions, can you alter them and then agree?  It’s doubtful. Software contracts are take-it-or-leave it contracts.  If you disagree with provisions you can certainly try to negotiate with the provider’s general counsel – but the company’s position will probably be that you need not use the software at all if you don’t like the terms of use.  Since software agreements for similar products have fairly similar provisions, it can be a frustratingly meaningless argument and difficult to avoid agreeing to questionable terms and conditions. And for companies taking web-based payments, often enough the benefits of getting online payments outweigh the risks of the contractual terms.

Reading through terms and conditions can be unpleasant. However, they do constitute a contract. It’s important to understand that by clicking “I AGREE,” you really do agree to be bound by contractual terms – whether you read them or not.

Certifying as a Woman-Owned or Minority-Owned Business Enterprise

Becoming a woman-owned business enterprise (WBE), minority-owned business enterprise (MBE), or other type of disadvantaged business enterprise (collectively, DBE) is a very attractive option for some businesses, particularly companies in the construction industry that want to obtain government contracts. Construction projects receiving Federal, state, or sometimes city funding have DBE participation goals, and general contractors use qualified DBEs on bids to meet those goals. As a result, DBEs can sometimes successfully bid jobs for a higher price than their non-DBE competitors.

A business may qualify as a DBE by meeting some fairly stringent criteria. The business must be at least 51% owned by the disadvantaged owner. The disadvantaged owner must also control the business, meaning that the owner must make strategic business decisions and be adept at the tasks that are at the heart of the business. If, for example, the business HVAC installation, the disadvantaged owner should at a minimum be able to read a set of plans and direct their employees’ work, if not to actually do the work themselves. Tasks like bookkeeping, human resources, or administration alone are generally insufficient to establish the disadvantaged owner’s control of the business.

Becoming a DBE isn’t as easy as simply filling out a form. The process for certifying can be time-consuming and demanding, and requires the applicant to submit a lot of paperwork relating to its ownership, finances, and business organization. Some of the information doesn’t appear relevant, such as an explanation of other family members in the business, an analysis of how the business received startup funding, or a statement of the disadvantaged owner’s personal assets. But failing to provide all information can result in the application being denied. Once an application is denied, it’s very difficult to overcome the presumption that the company was never qualified to become a DBE at all. A lawyer’s help in preparing and analyzing the application can maximize the company’s chances of success.

If you have any questions about DBE certification, feel free to reach out to us.  It’s our goal to help your business bloom.

Revel Casino Ends With A Whimper

Revel, the resort-casino in Atlantic City, closes its doors in just a few days. Perhaps Revel could have succeeded as a unique and elegant feature of the Boardwalk.  Instead, Revel was a catastrophic failure, becoming the victim of the economic downturn, competition, horribly bad luck, and bad decisions.

No new casinos had been built in Atlantic City for four years when Revel and its 90% owner Morgan Stanley, Inc. proposed to construct the Revel as a $2.4 billion modern casino. In 2007, they filed plans for the mammoth development, which included two hotel towers, a sizable spa and resort area, fine dining options, and a relatively small non-smoking casino floor. The plans called for natural light to flood into open, elegantly curved floor plans, decorative mosaic tile, modern and clean-lined hotel rooms, and dramatic vistas of the ocean. The finished facility looked like a sleek luxury hotel and not a windowless casino. Looking back through rose-colored glasses, it’s easy to see why the project was such an attractive investment.

And looking at the 2007 American economy through those rose-colored glasses, it’s easy to see why a new casino seemed like an excellent investment. The United States had seen a long period of low inflation and apparent economic stability. People had discretionary money to spend. Equally importantly, the economy appeared so strong that the American Dream of home ownership seemed attainable to average people with below-average credit.

Hence the economic bust. Predatory lenders approved sub-prime mortgages to extremely risky borrowers and then bundled those risky mortgages into securities. Those securities were graded low-risk by experts in the field and then sold as prime investments. In April of 2007 New Century Financial, a company specializing in sub-prime mortgages, filed a bankruptcy. From then on, companies involved in the sub-prime lending business – as well as government agencies – fell like dominoes: American Home Mortgage Investment Corporation; Countrywide Financial Corporation; Fannie Mae; Freddie Mac. This culminated in Lehman Bros., a financial services firm that had created and still held mortgage-backed securities, filing a bankruptcy in September of 2008. At that stage, borrowing became nearly impossible as the American economy accelerated into a free fall.

The economic situation was only part of Revel’s misfortune. On July 31, 2008, an airplane crash killed several Revel executives. Revel’s general contractor misrepresented that the project was under budget when it was far over budget, wasting around $100 million. In January of 2009, the project ran out of funding and Revel laid off 400 workers, retaining others to finish the construction of the exterior shell only. Two accidents in March 2010 injured a worker and damaged the project; in a later accident, a worker was struck by lightning and killed. Gambling opportunities in Pennsylvania and New York diminished Atlantic City’s market share. In April of 2010, halfway through construction, Morgan Stanley showed its lack of confidence in the project when it walked away from the project and its $932 million investment, put its equity position up for sale, and wrote off its enormous loss.

New Jersey Governor Chris Christie came to the rescue in February 2011, announcing that Revel had secured remaining financing. Christie signed a package of bills designed to revive the flagging Atlantic City tourism and gaming market. Additionally, the Economic Development Authority of New Jersey approved $261 million in tax-increment financing to assist Revel. The aid was to apply after Revel reached a set profit level. Revel was back in business, or at least, was able to finish the construction of the facility.

The Revel opened amidst great fanfare in April of 2012. Almost immediately, however, those of us in Philadelphia began to hear of its failings – the casino floor was too small, the customer service was failing, the spa and resort services were adequate at best, they did not offer free amenities to high rollers, food and drink were overpriced, guests got lost in the maze-like facility, and the casino was located inconveniently far away from outlet shopping and other casinos. According to those reports, instead of being a resort and a casino, the Revel was neither. Its profits reflected these failings: it was listed as having one of the lowest rates of casino winnings in Atlantic City, and showed consistent losses from the middle two quarters of 2012. These losses were exacerbated by the mandatory evacuation and extensive cleanup effort caused by Hurricane Sandy in October of 2012. Revel was forced to line up financing in December 2012 – the second time in less than a year.

In March of 2013 Revel filed a voluntary chapter 11 bankruptcy. Its goal was to file quickly, convert debt into equity, and allow for creditors to receive a sizable equity stake.  Specifically, Revel proposed to convert more than $1.5 billion of debt into $272 million, and reduce its interest expense from $102 million to around $32 million. General unsecured creditors would be paid in full. The plan recognized some of Revel’s customer-satisfaction shortcomings, and called for the addition of less-expensive amenities, a larger customer rewards program, resort passes, and accommodations for higher-stakes gamers.  The plan had been approved by most secured creditors before filing, and Revel exited its bankruptcy in less than two months. Revel immediately took steps to increase revenue. It removed its board of directors and fired around 18% of its staff. It advertised more widely, selling rooms online and hiring a new marketing representative, which doubled room occupancy. It fired its talent agent and started booking bigger concert acts. It made the facility more guest-friendly by installing signs in the confusing layout, allowing smoking, and selling day passes for its beach club.

Even after reducing the debt by over a billion dollars, Revel still failed because it could not handle the debt service stemming from the bankruptcy, as well as its fixed utility costs. Additional financing was granted by the secured creditors in November of 2013, but access to the funds was tightly restricted and required Revel to seek a buyer for its business. Revel could not do so.

On June 19, 2014, Revel filed its second bankruptcy, seeking to sell the facility at auction. At the time of filing, Revel had no interested buyer, but believed it could sell off its assets nonetheless. Unfortunately, no bids were received that met Revel's qualifications. As a result, in August, Revel announced that it would postpone the auction indefinitely and close its doors for good in September. Currently, Revel is scheduled to close to guests on September 2, 2014.

I believe that given enough time, or in the pre-downturn era, Revel could have found its audience. The concept was unique to the Atlantic City market, and the facility was stunning. But dozens of factors figured into its failure: The economic downturn. The loss of leadership at an early stage.

Construction cost overruns. New competition in neighboring states. Failure to recognize its audience. Failure to overcome Morgan Stanley’s withdrawal. Lightning strikes and hurricanes. All in all, it’s no wonder that Revel ended with a whimper.



Declaration of Dennis Stogsdill, Chief Restructuring Officer of Revel AC, Inc., in Support of the Debtors & First Day Pleadings, Bankr. D. N.J. Case No. 13-16253 JHW (Docket No. 3, filed Mar. 25, 2013).
Upscale; Revel N.J. casino files for bankruptcy; USA TODAY, June 27, 2013, available at bankruptcy/ (last visited 8/26/2014).
“Crash Course: The origins of the financial crisis,” THE ECONOMIST, Sept. 7, 2013, available at financial-crisis- are-still- being-felt- five-years-article (last visited 8/21/2014).
Declaration of Shaun Martin in Support of First Day Motions and Applications, Bankr. D. N.J. Case No. 14-2265 GMB (Docket No. 5, filed June 19, 2014).
“A timeline of Atlantic City’s Revel Casino Hotel,” THE ASSOCIATED PRESS, Aug. 12, 2014, available at of-atlantic- citys-revel.html (last visited 8/21/2014).
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