Legal Question in Business Law in Florida

Is no-compete / no-raid agreement is valid if the subsidiary is no longer conduc

I signed a no-compete / no-raid agreement with a subsidiary company before signing on as President and CEO in July of this year in exchange for consideration � 10% stock. The parent company was to fund the subsidiary for the first twelve months. An office in Tennessee was already established in January of this year and a new territory in Florida was opened in August. The no-compete agreement was for a 100-mile radius from each office location. The financial health of the parent corporation has since deteriorated causing the shutdown of the subsidiary next month. The parent company will take over all TN contracts and the Florida operation will be abandoned. The agreements were between the parent company, its subsidiary and myself. My question is whether or not the no-compete / no-raid agreement is valid if the subsidiary is no longer conducting business? Can I establish a new company with the concepts that have been abandon by the parent company and its subsidiary? Can I hire the former employees?


Asked on 12/07/00, 2:58 pm

2 Answers from Attorneys
Randall Reder Randall O. Reder, P.A.

Re: Is no-compete / no-raid agreement is valid if the subsidiary is no longer co

Mr. Verbit is right. In addition you may have other

reasons for not complying with the agreements. An

attorney would have to review the agreements and

the Florida Statute concerning such agreements in

order to give you competent advice. I suggest you make

an appointment and see one.

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Answered on 12/18/00, 8:55 am
Stephen Verbit Stephen R. Verbit, P.A.

Re: Is no-compete / no-raid agreement is valid if the subsidiary is no longer co

The agreement would have to be reviewed by an attorney in order for you to receive any kind of reliable advice. You first stated that the agreement was between you and the subsidiary. Later, you stated the agreement was between you, the parent company, and the subsidiary. The question is who has the right to enforce the agreement. If it is the subsidiary only, and the subsidiary has been dissolved, then you may not have a problem. If the parent company has the right to enforce the agreement, then you could risk enforcement by the parent company, and the fact that the subsidiary was shut down may not be relevant.

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Answered on 12/08/00, 4:29 am


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