• By Michael
  • 17 May, 2013
INTRODUCTION Though it may seem that the economy is on the mend, a quick discussion with the leaders of many area businesses exposes an underlying unease as to whether the economy as a whole can sustain its recovery given the inability of bureaucrats in Washington to craft long-term solutions to our country’s financial crisis.  Many […] The post CASH OR CREDIT…LANDLORDS BEWARE! appeared first on GGHH Law.
Though it may seem that the economy is on the mend, a quick discussion with the leaders of many area businesses exposes an underlying unease as to whether the economy as a whole can sustain its recovery given the inability of bureaucrats in Washington to craft long-term solutions to our country’s financial crisis.  Many of these businesses continue to struggle to remain profitable and avoid the financial pitfalls of the recent recession.  These same struggles affect more than the businesses themselves, and when a business’ financial struggles involve a bankruptcy they can have devastating results for creditors, particularly commercial landlords.  While commercial landlords either holding a cash security deposit or a letter of credit may think themselves isolated from a tenant’s bankruptcy, some have found that neither is actually immune from risk.
Cash security deposits have long been the traditional form of security for a commercial lease, typically in the amount of one to two month’s rent.  However, the recent financial crisis exposed a weakness in what was otherwise thought to be ironclad security against a tenant’s default.  When a tenant declares bankruptcy the landlord may find themselves enmeshed in a fight with the bankruptcy trustee to retain that security deposit.  A cash security deposit is generally regarded as an asset of the bankruptcy estate under Section 541(a).  Courts have held, however, that landlords may offset a portion of the security deposit against their allowable claims but that any surplus must be returned to the debtor ( Oldden v. Tonto Realty Corp. , 143 F.2d 916 (2 nd Cir. 1944)).  They have gone further to provide that a landlord’s security deposit constitutes a perfected security interest or lien in the landlord’s favor ( In re Johnson , 215 B.R. 381, 384 (Bankr. N.D. Ill. 1997)).  It would seem the landlord’s ability to retain the security deposit is an equitable remedy until one examines and understands what an “allowable claim” is under the Bankruptcy Code.
A debtor-tenant has the ability to reject certain leases pursuant to Section 365 of the Bankruptcy Code.  Such a lease rejection is tantamount to a default under the terms of most leases giving the landlord a general unsecured claim against the bankruptcy estate for the resulting damages.  Unfortunately, the landlord’s claim is limited by Section 502(b)(6) of the Bankruptcy Code to the amount of accrued but unpaid rent plus the amount of rent reserved under the lease for the greater of one year or 15% of the remaining term of the lease.  To the extent the cash security deposit exceeds the amount of the Landlord’s claim, it must be returned to the debtor’s bankruptcy estate.
In order to provide some insulation from the risk of a security deposit being tied up in a tenant’s bankruptcy, many landlords prefer the issuance of a standby letter of credit.  A standby letter of credit issued by the tenant’s bank or, preferably, a bank satisfactory to the landlord is an independent obligation of the issuing bank to the landlord.  The letter of credit stands apart from the tenant’s obligation to reimburse the issuing bank and is therefore not generally a part of the bankruptcy estate.  Less risk?  It would seem that way until one considers the long list of bank failures over the past several years and the FDIC’s unwillingness to honor letters of credit issued to commercial landlords by failed banking institutions.  With the economic recovery still uncertain, commercial landlords should take proactive measures in their leases requiring tenants to replace letters of credit issued by insolvent banks and permitting the landlord to make a periodic review of the letter of credit issuer.  Landlords should also reserve the absolute right to approve the bank issuing the letter of credit or provide a list of acceptable financial institutions from whom they will accept a letter of credit.  It should also be noted that the interaction between a landlord’s proposed draw on a letter of credit and the 502(b)(6) cap is unsettled.  Landlord’s should anticipate that any drawdown on a letter of credit may have an impact on the amount of the landlord’s claim in a tenant’s bankruptcy.
Jordan Uditsky is a partner in the corporate practice of Garelli, Grogan, Hesse & Hauert.  He brings a diverse legal and business background to the firm, with a particular emphasis on the representation of startups and emerging companies, commercial real estate transactions, tax and estate planning.  He advises businesses in a broad range of general corporate and corporate transactional matters, including business organizations and choice of entity issues, financing and private equity, mergers, acquisitions and joint ventures as well as business restructurings.  Mr. Uditsky also employs his experience as a business owner to advise companies on regulatory issues and compliance matters, employment policies and legal issues related to their general operations and business strategy.
Garelli Grogan Hesse & Hauert offers sophisticated yet cost effective, practical solutions to our clients’ legal challenges.  We strive to understand not only the legal issue but our clients’ business goals as well and craft tailored solutions to help them succeed.  Our attorneys represent businesses and individuals throughout the Midwest in matters that include commercial litigation, securities, business counseling and transactions, commercial real estate, estate planning and family law.  For more information contact Jordan Uditsky at (630)833-5533 x12 or
The post CASH OR CREDIT…LANDLORDS BEWARE! appeared first on GGHH Law .
By Robert Haney 13 Nov, 2017

When preparing to organize your dental practice, choosing the form of business entity may seem daunting. Dentists have many options for organizing their practices. In Illinois, these options include a limited liability partnership, professional association, professional limited liability company or a professional service corporation (“PSC”). Often, the best option for solo practitioner dentists is to form a PSC as it can provide tax advantages, liability protection and other benefits that are beyond the scope of this article. While a PSC operates similarly to a traditional corporation, because of its unique nature the set-up and maintenance of a PSC is a bit more nuanced than that of the traditional corporation. This article will provide you with a general overview and basic legal compliance checklist of the PSC incorporation requirements for dentists, but may also be applicable to other healthcare professionals.


1)     Choose Your Company’s Personnel . Traditional corporations are not generally limited in who can participate in its ownership and operation. However, under the Professional Services Corporation Act (the “PSC Act”), a PSC is limited in who is allowed to participate in the company. All shareholders, directors, officers, agents and employees of the PSC must be duly licensed by the Illinois Department of Financial and Professional Regulation (“IDFPR”) to provide their respective dental services. Only “ancillary personnel” do not require licensure. Ancillary personnel, which typically includes clerks, administrative staff and technicians, are employees who:

a)    Are not licensed under the Illinois Dental Practice Act (“Dental Act”);

b)    Are supervised by persons licensed under the Dental Act;

c)    Do not hold themselves out to be licensed under the Dental Act; and

d)    Are not prohibited by the IDFPR from being employed by the PSC.  

2)     Choose Your Company’s Name . Choosing your company’s name is vital to your PSC as it is often the first impression that people have of your company. The PSC Act has two main requirements when choosing your company’s legal name. The name must:

a)    Include the full name or last name of one or more of the shareholders; and

b)    End with “chartered”, “Limited”, “Ltd.”, “Professional Corporation”, “Prof. Corp.” or “P.C.”

However, if you would like to operate your company under a different name, your PSC can adopt a fictitious name by making a filing with the county clerk of the county where your company’s principal office is located.

3)     Choose Your Company’s Location . The PSC Act and Dental Act require that your company’s principal address be located in Illinois. Additionally, the PSC Act requires you to submit a separate application for licensure from IDFPR for each business location in Illinois.


1)     Draft Your Corporate Documents . To ensure that your PSC is in full corporate compliance, you will need to draft articles of incorporation, bylaws and other necessary documents for your company. In having these documents prepared, please note that it is important to use attorneys experienced in setting up PSCs to best protect your company from increased and unnecessary liability.

2)     File Articles of Incorporation with the Illinois Secretary of State . Once you have compiled all of the necessary corporate documents, you will need to file the Articles of Incorporation with the Secretary of State. Articles of Incorporation can be filed in-person, via mail or on the Secretary of State website .

3)     Obtain Your Federal Employer Identification Number . You can obtain a Federal Employer Identification Number or EIN, from the IRS via telephone or the IRS website .

4)     Register with the IDFPR . The final step in setting up your PSC before your company can begin practicing dentistry in Illinois is obtaining a license for your PSC from the IDFPR. The license application can be filled out online via the IDFPR website .


Once you organize a PSC, it is imperative to properly maintain the “corporate veil”, or the invisible wall separating you from your PSC. If the corporate veil is not maintained, the limited liability benefits you are afforded under your PSC can be destroyed and you may be held personally liable for the liabilities of your PSC (note however, that a PSC does not provide insulation from dental malpractice, for which a dentist remains personally liable). In order to maintain your PSC’s corporate veil, you must:

1)    Timely file the PSC’s Annual Reports.

2)    Timely renew the PSC’s license with IDFPR.

3)    Properly maintain separate corporate minutes, records and consents for the PSC.

4)    Do not commingle PSC funds and personal funds.

5)    Only sign documents in the operation of your PSC in your capacity as an officer, director or shareholder of the company.

Please note that the foregoing list is not necessarily exhaustive but it is the minimum you need to do to maintain your PSC.

That concludes the general overview and basic legal compliance checklist for forming a PSC in Illinois. It is important to remember that while a PSC may be the correct choice for certain dentists, it may not be the best choice for you. Accordingly, regardless of how you choose to organize your dental practice, it is important to consult with an experienced attorney beforehand to determine which type of entity best suits your specific needs. Please feel free to reach out to me with any questions at or visit our website at .    


Robert Haney is an attorney and business advisor serving businesses in the Chicagoland area and throughout the country. Mr. Haney advises businesses and entrepreneurs from startup to sale, and strives to be a trusted advisor to his clients by delivering practical and efficient counsel on a wide range of matters. His combination of legal and business experience provides a unique perspective when counseling clients, giving him an understanding of the true value and application of his advice to their organizations. To learn more about Mr. Haney, visit .

By Michael 05 Dec, 2016
On November 22, 2016, U.S. District Court Judge Amos Mazzant granted an Emergency Motion for Preliminary Injunction and thereby enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule on December 1, 2016. The case was heard in the United States District Court, Eastern District of Texas, Sherman Division (State of Nevada […] The post Important information regarding recent overtime litigation in the U.S. District Court of Eastern District of Texas appeared first on GGHH Law.
By Michael 17 May, 2013
INTRODUCTION Though it may seem that the economy is on the mend, a quick discussion with the leaders of many area businesses exposes an underlying unease as to whether the economy as a whole can sustain its recovery given the inability of bureaucrats in Washington to craft long-term solutions to our country’s financial crisis.  Many […] The post CASH OR CREDIT…LANDLORDS BEWARE! appeared first on GGHH Law.
By Michael 09 Jan, 2013
Limited Liability Companies, or “LLC” as they are more commonly known, have been the “entity du jour” over the past decade, and I’ve been asked by many a client what the real reasons are to choose an LLC over, for example, an S-Corporation, a Partnership or a traditional C-Corporation.  Choosing the most appropriate structure for […] The post TO LLC OR NOT TO LLC: THAT, IS THE QUESTION! appeared first on GGHH Law.
By Michael 13 Nov, 2012
As the former owner of a contracting business I am all too familiar with the need to be named as an “additional insured” on a subcontractor’s certificate of insurance.  Most business owners and risk managers though don’t fully understand the nuances of this often overlooked but vitally important part of their overall insurance coverage.  For […] The post DON’T GET TRAPPED IN THE COVERAGE GAP: ADDITIONAL INSUREDS UNDER COMMERCIAL GENERAL LIABILITY POLICIES – RECENT DEVELOPMENTS appeared first on GGHH Law.
By Michael 07 Nov, 2012
With the increase in recent years of real estate transactions involving distressed mortgage loans and investors or developers intent on acquiring fee title to the underlying property, the City of Chicago needed to clarify its position on the interaction of Exemptions C & M of the Chicago Real Property Transfer Tax Ordinance. Exemption C provides […] The post CITY OF CHICAGO CLARIFIES EXEMPTIONS TO TRANSFER TAX ORDINANCE appeared first on GGHH Law.
By Michael 02 Oct, 2012
Elmhurst, IL, October 1, 2012–Garelli Grogan Hesse & Hauert (GGHH), a multi-practice law firm serving businesses and individuals throughout the Midwest, is pleased to announce that Jordan Uditsky has joined the firm as a partner to further expand its existing business transactional practice. Mr. Uditsky brings a wealth of experience to GGHH as both a […] The post Garelli Grogan Hesse & Hauert Appoints New Lawyer appeared first on GGHH Law.
By Kari 28 Feb, 2012
While you may have the best of intentions as an employer, a single misstep can create ugly employment lawsuits. There are important things that every employer must know to avoid employment litigation. Discrimination, in particular, can be especially tricky. Here’s what you need to know: Discrimination Hiring and promoting the best-qualified candidates isn’t always as easy […] The post What Employers Need to Know About Discrimination appeared first on GGHH Law.
By Kari 22 Feb, 2012
You have an idea. You’ve decided to go for it. You’re ready to start your own business – but there are still a lot of questions need answered. What type of organizational structure fits your business? How many employees should you hire initially? Where do you get the funding if you can’t afford to start it […] The post What You Need to Know About Legally Organizing a Business appeared first on GGHH Law.
By Kari 15 Feb, 2012
Protecting our loved ones is a primary concern for most of us. Although it’s unpleasant to think about what happens when we die, it’s essential that we plan ahead. If passing your assets along to your surviving family members, close friends and favorite charities is important to you, there are some things you should know about […] The post 3 Common Questions Probate Lawyers Are Asked appeared first on GGHH Law.
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