New investment possibilities for Subcontractors....FOREIGNERS!

Check out the The EB-5 Immigrant Investor Program where the federal government would allow foreign investment would lead to 10 positions to be filled by U.S. citizens!

Can an MBE recover where it alleges KCMO project failed to comply with minority participation requirements?

In Kansas City Hispanic Association Contractors Enterprise, Inc. and Diaz Construction Company vs. City of Kansas City, Missouri, et al.), Court of Appeals, Western District - WD69246 the Court ruled the minority contractor had no standing to sue after its bid was rejected as a third party beneficiary under the development agreement entered into between the tax incremental financing commissionand the owner of the project. Instead for failing to comply the owner of the property would have to pay damages to the commission equal in amount they should have paid the minority contractors.

Missouri Court of Appeals enforces a subcontractor contract between an owner and the subcontractor!

In the words of the Court, as the subcontractor was unlearned in legal matters "...we must take the language as it is and the people as they are..." Looks to be a victory for the hard working contractors!

MICHAEL HILLES, Respondent vs. MICHAEL THOMAS and KIM THOMAS, Appellants, and HOME EQUITY AMERICA, INC, and LOAN CITY, Defendants
Court of Appeals, Southern District - SD29152

Contractors and manufacturers - the time has come to take the needed steps to protect yourself from the challenges of bankruptcy....GM has filed bankruptcy today!

General Motors files for bankruptcy protection

By DAN STRUMPF and KIMBERLY S. JOHNSON, AP Auto Writers Dan Strumpf And Kimberly S. Johnson, Ap Auto Writers 37 mins ago

NEW YORK – General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.

GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

"The General Motors board of directors authorized the filing of a Chapter 11 case with regret that this path proved necessary despite the best efforts of so many," GM Chairman Kent Kresa said in a written statement. "Today marks a new beginning for General Motors. ... The board is confident that this New GM can operate successfully in the intensely competitive U.S. market and around the world."

As it reorganizes, the fallen icon of American industry will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

The Detroit automaker said warranty coverage, service and customer support will continue uninterrupted, and employees and essential suppliers will continue to be paid. GMAC Financial Services said in a statement that it will continues to provide automotive financing to GM and Chrysler dealers and customers.

GM will follow a similar course taken by smaller rival Chrysler LLC, which filed for Chapter 11 protection in April. A judge gave Chrysler approval to sell most of its assets to Italy's Fiat, moving the U.S. automaker closer to a quick exit from court protection, possibly this week.

The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers getting a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.

President Barack Obama is scheduled to address the nation about GM's future at midday from Washington, and GM CEO Fritz Henderson is to follow him with a news conference in New York.

Administration officials, speaking on condition of anonymity in advance of Obama's remarks, said they expect the bankruptcy court process to last 60 to 90 days. If successful, GM will emerge as a leaner company with a smaller work force, fewer plants and a trimmed dealership network.

GM revealed Monday that it will permanently close nine more plants and idle three others.

The Pontiac, Mich., and Wilmington, Del., assembly plants will close this year, while plants in Spring Hill, Tenn., and Orion, Mich., will shut down production but remain on standby. One of the idled plants will be retooled to build a small car that GM had originally planned to build in China.

Seven powertrain and parts stamping plants will be closed starting in June 2010, while an additional stamping plant will be idled but remain in a standby capacity.

GM's filing comes 32 days after a Chapter 11 filing by Chrysler, which also was hobbled by plunging sales of cars and trucks as the worst recession since the Great Depression intensified.

The sale to Fiat means Chrysler could be out of bankruptcy within the government's original timeframe of 30 to 60 days. Chrysler's plan gives a 55 percent stake of the new company to a union-run trust for retirees. Fiat gets a 20 percent stake to Fiat that can ultimately grow to 35 percent. The U.S. and Canadian governments get smaller pieces.

The third of the one-time Big Three, Ford Motor Co., has also been stung hard by the sales slump, but it avoided bankruptcy by mortgaging all of its assets in 2006 to borrow roughly $25 billion, giving it a financial cushion GM and Chrysler lacked.

GM will move forward with four core brands — Chevrolet, Cadillac, Buick and GMC — and cut four others. The company plans to cut 21,000 employees, about 34 percent of its work force, and reduce the number of dealers by 2,600. GM said it was finalizing a deal to sell Hummer, and plans for Saturn are expected to be announced within weeks.

"There is still plenty of pain to go around, but I'm confident this is far better than the alternative," said Sen. Carl Levin, D-Mich. "It's a new beginning, it's a rebirth, it's a new General Motors."

GM shares fell as low as 27 cents in Monday morning trading, their lowest price in the company's 100-year history, but rebounded to rise 11 cents from Friday's close to 86 cents in midday trading. The News Corp. unit that oversees the Dow Jones industrial average said GM will be kicked out of the index on June 8 and be replaced by Cisco Systems Inc. The index's rules prohibit it from including companies that have filed for bankruptcy.

The bankruptcy filing represents a dramatic downfall for GM, which was founded in 1908 by William C. Durant, who brought several car companies under one roof and developed a strategy of "a car for every purse and purpose." Longtime leader Alfred P. Sloan built the global automaker into a corporate icon.

GM first sought help from the Bush administration and Congress last year as it was in the midst of being staggered by $30.9 billion in losses and seeing its cash resources shrink by more than $19 billion.

Consumers, worried about the economy and the future of GM, shied away from the company's cars and trucks this year even after President George W. Bush promised loans and Obama followed through with billions more in assistance — plus a stiff set of new requirements GM was ordered to meet.

When GM failed to do so by a March 31 deadline, Obama forced out CEO Rick Wagoner and replaced him with Henderson.

Wagoner served at the helm since 2000 and was the face of GM when he first flew on a company jet to ask Congress for aid. After a firestorm of negative publicity, Wagoner rode in a hybrid Chevrolet Malibu from Detroit to Washington for a second set of withering questions before lawmakers.

But that amounted to only a sideshow as the automaker's financial position worsened. Its revenues plunged almost 50 percent in the quarter ended March 30 and it racked up another $6 billion in losses.

The Henderson-led GM faced a government-imposed June 1 deadline to restructure, slash costs and modify contracts with its union and dealers. But meeting most of those demands, plus a late agreement by many bondholders to swap the $27 billion in debt they are owed for shares in a new GM, were not enough to prevent the court filing.

Some bondholders might still fight GM's reorganization plan, but the company and Treasury hope the 54 percent who supported the debt-for-equity offer will convince the judge that its a fair deal.

"There is no other sale, or other potential purchasers, present or on the horizon," Henderson said in an affidavit filed Monday in bankruptcy court. "The only other alternative is the liquidation of the debtors' assets that would substantially diminish the value of GM's business and assets, (and) throw hundreds of thousands of persons out of work and cause the termination of health benefits and jeopardize retirement benefits for current and former employees and their families."

It was an all-out sprint to Monday's filing, as GM quickly sought to nail down deals with its union, bondholders and sell off brands and along with most of its Opel operations in Europe in an effort to appear in court with a near-complete plan to quickly emerge as a leaner company with a chance to become profitable.

The German government on Sunday agreed to lend GM's Opel unit $2.1 billion, a move necessary for Magna International Inc. to acquire the company. The Canadian auto parts supplier will take a 20 percent stake in Opel and Russian-owned Sberbank will take a 35 percent, giving the two businesses a majority. GM retains 35 percent of Opel, with the remaining 10 percent going to employees.

In the U.S., the UAW's ratification of concessions, announced Friday, will save GM $1.3 billion per year. The new deal freezes wages, ends bonuses and eliminates some noncompetitive work rules.

It also moves billions in retiree health care costs off GM's books. In exchange for its ownership stake, $6.5 billion of interest-bearing preferred shares, and a $2.5 billion note, the trust will take on responsibility for all health care costs for retirees starting next year. Higher health care costs alone accounted for a $1,500-per-car cost gap between GM and Japanese vehicles.

GM will offer buyouts and early retirement packages to all of its 61,000 hourly workers as it plans to shrink overall employment. The company also has about 27,000 white collar employees. In contrast, GM employed 618,000 Americans in 1979, more than any other company.

GM earlier outlined a plan to cut about 1,100, or 40 percent, of its dealers by the end of 2010. It also plans to shed about 500 dealerships that market the Saturn, Hummer and Saab brands.

A person familiar with GM's plans said the automaker has no plans to accelerate the dealership cuts that were already announced. The person declined to be named because these details have not been made public.

The person said dealerships that the company is planning to terminate began recieving wind-down agreements Monday.

But just cutting labor and overhead costs won't be enough to save the company. It also has been working to streamline its engineering and design, as well as standardize many parts so they can go into multiple models.

The once powerful GM earns a place in history as the largest U.S. industrial company to file for bankruptcy protection, and the fourth-largest company overall to do so based on its $82.29 billion in assets as of March 31.

Lehman Brothers Holdings Inc.'s Sept. 15 bankruptcy filing is the nation's largest with $691.1 billion in assets, and likely served as a catalyst for GM — and Chrysler's — downfall, as it hastened the erosion of credit markets, making it more difficult for consumers and dealers to finance new vehicles.

Washington Mutual Inc.'s bankruptcy filing 11 days later ranked second with $327.9 billion in assets, according to BankruptcyData.com. That's followed by WorldCom Inc.'s 2002 filing, which listed $103.9 billion in assets.

Chrysler's bankruptcy filing now ranks seventh with $39.3 billion in assets.

___

AP Auto Writer Kimberly S. Johnson reported from Detroit. AP Auto Writer Tom Krisher in Detroit, AP Business Writer Harry R. Weber in Atlanta, AP Business Writer Vinnee Tong in New York, and Associated Press writers Ken Thomas and Jim Kuhnhenn in Washington contributed to this r

Contractors: Here is another outgrowth of teh Stimulus Package..a 65% fedral premium subsidy for individuals entitled to COBRA

Ken Mason of Spencer Fane reports:

The February 2009 economic stimulus package included a temporary 65% federal premium subsidy for individuals becoming entitled to COBRA coverage due to an employee's involuntary termination of employment. Congress recognized, however, that the purpose of this subsidy could be undermined if disputes between employers and their former employees as to the subsidy's availability took months or even years to resolve. Accordingly, Congress provided that any such dispute would be resolved by a federal agency -- the Department of Labor ("DOL") for private employer plans subject to the federal COBRA provisions; the Department of Health and Human Services ("HHS") for governmental plans and small insured plans covered by state "mini-COBRA" statutes. Moreover, these agencies are to resolve such disputes within 15 days.

The DOL has now released the Application form to be used by an individual to request a review of an employer's denial of the premium subsidy. This same form may also be used to request a review of an employer's refusal to offer a second COBRA election period to an otherwise-eligible individual whose termination of employment occurred before the subsidy was enacted (but on or after September 1, 2008). The Application is posted on the DOL's website, along with supporting instructions.

This Application is designed to be completed and submitted online, and that approach is officially "encouraged" by the DOL. Alternatively, however, an individual may complete, print, and submit the Application via facsimile or regular mail, following the instructions provided on the Application's cover page. These instructions also note that separate Applications are required for any family members who do not have identical plan information.

Applicants are encouraged to submit any documents that might be relevant to the DOL's review. Examples of such documents include a COBRA election notice, a completed "Request for Treatment as an Assistance Eligible Individual" (the model form issued by the DOL earlier this year), an insurance card, payroll stubs showing deductions for health benefits, any documents detailing the date and circumstances of the employment termination, and any documentation regarding the employer's denial of the premium subsidy or second election period.

The DOL website contains a separate link to be used in submitting these documents. It appears that this same link would be used by an employer in submitting any documents it believes support its denial of the individual's request.

Employers will want to disseminate information concerning this Application to their current and former employees. An e-mail message containing a link to the online Application might be an ideal method of doing so. Employers will also want to make a special point of contacting any individuals who have already expressed disagreement with a prior denial of the premium subsidy or second election period.

More Chinese Drywall reports from the Feds: Sulphur update

The EPA has found sulfur and Strontium compounds in the drywall and predict that the drywall may have been used in more than 100,000 homes including houses re built after Hurricane Katrina.

If your home smells like rotten eggs, your home may have been built with Chinese drywall!

OCIPs and CCIPs

A recent article in the Construction Executive (April 2009) points to the need to have the insured place collateral for two types of financial loss...paid loss and incurred losses. To me this is much like the analysis one does with a workers comp fund, that is requiring negotiation of collateral, reviews of history of claims, identifying those areas of the country and projects that bring the most exposure to the table and of course a determination of which contracting entities should be part of your plan. What other criteria do you look for in evaluating how to create and protect your OCIP or CCIP?

Contractors can force arbitration but.......

The decision by the Supreme Court in Arthur Andersen LLP v. Carlisle requires adherence to Section 3 of the Federal Arbitration Act if the litigant is entitled to a stay under relevant state contract law. 

So now we need to look at both federal and state law in regard to government contracts?

Iowa Considers Bill to Modify Mechanic's Lien Law

Iowa Considers Bill to Modify Mechanic's Lien Law

  

Joshua C. Dickinson

   

The Iowa legislature is considering the passage of HSB 173/ SSB 1215.    It would revise Iowa Code Chapter 572, Mechanic's Lien Law, to require contractors and material providers to give public notice of their rights in order to perfect a mechanic's lien.  Notice will be posted on a State Construction Registry. 

The bill would also expand the right to recover attorney fees to any prevailing plaintiff and allows any prevailing defendant to recover attorney fees, not just those defending claims involving owner-occupied properties.  Commercial construction would be exempt from the central registry requirement. 

The bill has been assigned to subcommittee in House and Senate Judiciary Committees and will carry over to the 2010 session.

 

 

 

 

Joshua C. Dickinson, Esq.
Spencer Fane Britt & Browne LLP
9420 Underwood Ave., Suite 200
Omaha, Nebraska 68114
(402) 965-8600

(402) 547-5519 (DD)
(402) 965-8601 (facsimile)

1000 Walnut, Suite 1400
Kansas City, MO 64106
(816) 474-8100

jdickinson@spencerfane.com

www.spencerfane.com

www.noncompetelawyers.com

 

 

More Stimulus Package information courtesy of the Kansas City Business Journal

Just to keep you up to speed on the status of all things related to the government contracting opportunities available to contractors:

http://kansascity.bizjournals.com/kansascity/stories/2009/05/04/story1.html

 

http://kansascity.bizjournals.com/kansascity/stories/2009/05/04/focus11.html