Corporate Due Diligence and Asset Searches in Litigation

How Corporate Due Diligence Investigations, Asset Searches, and Litigation Support Can Protect Your Company

Our Indianapolis Private Investigators at Lauth Investigations International work with national and global corporations and their corporate attorneys to provide a variety of investigative services. Our Indiana corporate investigators specialize in performing comprehensive due diligence investigations, corporate background screening, validation of assertions and representations, employee infidelity, asset searches, embezzlement and fraud investigations, and other complex internal investigations. At Lauth Investigations, our corporate investigative team works to provide comprehensive investigative services that help corporate officers assess risks and liability to strengthen internal controls, along with litigation support.

Corporate Veil

Unlike the structure of typical small businesses or a limited liability companies (LLC), corporate structures vary and created under the laws of a state to establish the corporation as a separate entity of its Board of Directors. Various forms of corporations exist and the actions of the corporate officers governed by the bylaws of the entity.

Generally accepted by law, corporations have responsibilities similar to that of an individual. Corporations can exercise rights against other individuals and entities, and the corporation held responsible for violations and criminal offenses, such as fraud.

Though not universal throughout the United States, one aspect of an incorporated entity is the “corporate veil” or limited liability protection in the event that a corporation fails. The term “corporate personhood” allows a corporation to exercise the same rights as an individual and in some states, provides limited liability to shareholders removing personal liability and insulating them from criminal liability, bankruptcy, corporate debt, and judgments against the corporation.

Corporate Litigation Support

Corporate litigation is a complex area of law that can include a variety of tort and contractual claims, such as breach of contract, misrepresentation of assets, fraud, trade secrets, worker’s compensation, infringement of intellectual property, and breach of fiduciary duties to name a few.

Lauth Investigations Litigation Support focuses on helping our clients resolve business disputes with the most comprehensive investigative and litigation support. Our litigation support investigators help uncover information and verify facts that will assist with pre-trial preparation, discovery, trial, and post-trial.

Corporate Disputes and Legal Considerations

  • Employment Law Disputes
  • Corporate Contract Negotiation
  • Breach of Contract and General Contract Disputes
  • Payment Disputes
  • Non-Compete Agreements
  • Property sell and purchasing
  • Mergers and Acquisitions
  • Commercial Leasing Disputes
  • Insurance Disputes
  • Employee Fraud/Embezzlement
  • Corporate Partnership Disputes
  • Business Torts

Why Companies in Litigation Over 500K Should Conduct Asset Searches

When facing corporate litigation in excess of $500K, the decision makers of the corporation must take into consideration the cost of legal representation and other potential liability. If the defendant has assets, an evaluation of those assets, along with deliberating litigation costs are worthwhile.

A comprehensive asset search can quickly identify and locate a property that can be attached to satisfy a judgment or be used as a powerful negotiation tool between the parties prior to ever initiating a lawsuit.

Indianapolis private investigator Thomas Lauth, the owner of Lauth Investigations, recommends any corporation weighing the pros and cons of pursuing litigation that may result in a judgment in excess of $500K, should first have an all-inclusive asset search conducted to determine if a judgment can be collected.

Private investigators and investigative firms have the capability of assisting a corporation prior to initiating litigation by reviewing financial records, trace and discover fiscal misrepresentations, confirm accurate financial information and locate hidden assets enabling corporate representatives to make an informed decision whether to pursue litigation. If litigation is pursued, it becomes paramount to ensure the information collected is comprehensive and presented in an understandable and simplified form that will be admissible in court.

The Role of In-House Corporate Attorneys

Corporate lawyers typically have experience and knowledge in licensing, contract and tax law, corporate structure, zoning, security law, accounting, intellectual rights, bankruptcy and any other laws specific to the companies they represent.

An in-house corporate attorney advises corporations on the entity’s legal rights, duties, and responsibilities of the corporate officers, along with providing legal oversight on all commercial transactions and contracts.

Corporate attorneys act more as facilitators and negotiators in the role of corporate transactions, reviewing and drafting documents, structuring deals and attending meetings. A corporate attorney’s duties can vary from acting in an advisory capacity to negotiating corporate mergers and acquisitions.

The Role of an Outside Civil Litigation Attorney

An in-house corporate attorney, who primarily acts in an advisory and negotiation capacity, may determine that civil litigation is the only way to remedy a dispute.

A civil attorney deals specifically with disputes between corporations and /or individuals and is a branch of law focused on representing those whose compensation may be awarded. Civil litigation typically focuses on contracts, torts, and other disputes as mentioned above.

Civil law differs from other types of law and designed to ensure agreements and settle disputes are honored; in essence, to ‘right a wrong’ and ensure the victim is compensated.

In any type of case it is important for a corporation or attorney to conduct due diligence on the potential defendant before expending money and time in pursuing a claim that may never be repaid because the defendant has no assets, has minimized or successfully hidden assets.

The Role of Creditor Rights Attorney

Creditor Rights Attorneys represent creditors who are attempting to collect money borrowed and loans not repaid. Normally, the Fair Collections Practices Act protects debtors, yet it is still necessary for the creditor to make every attempt to obtain a judgment requiring the debtor to repay the loan. Debt falls into two categories; secured and unsecured.

Secured debt is a loan secured with collateral, meaning some type of property to ensure repayment, should the debtor fail to make payments. An unsecured loan is debt that has no property or collateral to secure the loan, therefore if the debtor defaults and the creditor must take alternative measures to collect the amounts owed.

Any repossession of secured personal property must follow State Uniform Commercial Code (UCC). Creditor Rights Attorneys assist creditors with creditor litigation, liens, domestic and foreign judgments, garnishments, and collection services.

Types of Services That Can Assist Corporations and Attorneys in Due Diligence Asset Searches

Asset search companies and licensed private investigative firms that specialize in providing comprehensive asset searches can provide invaluable assistance to attorneys and corporations such as financial institutions, debt recovery units, government agencies, and private individuals in recovering assets.

Corporate Summaries identify corporate EIN, DUNS, estimated sales, and income; to include the number of employees, operating locations, employee profiles and structure of the potential target corporation.

  • Identify names of officers, directors, and management teams of potential target corporations.
  • Identify potential target corporation’s clientele, nature of business and volume of business with each clientele.
  • Identify potential target corporation’s vendors, suppliers, logistics and financial institutions.
  • Credit and payment analysis for 12-36 months; this includes creditors and debt amounts.
  • A search of court records.
  • Identify all physical locations of the potential target corporation, tangible assets, and on-site physical confirmation of assets such as machinery and equipment.
  • Analyze annual production capacity.
  • Identify financial institutions, brokerage firms, and offshore assets.
  • Domain names, website traffic and domain’s estimated value.

About the Author: Kym L. Pasqualini is the founder of the Nation’s Missing Children Organization in 1994 and the National Center for Missing Adults in 2000. Kym is a consultant and expert in the field of missing persons and continues to advocate for crime victims utilizing 20 years’ experience working with government officials, law enforcement, advocates, private investigators, and national media.

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