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What are the restrictions for investing in a troubled business?

I want to invest in a troubled business. I know that in a troubled business an investor is supposed to maintain the number of employees that the business had before the investment was made. If I maintain the number of employees but replace them with my own employees (all of whom can legally work in the US), am I in violation of the EB-5 program for troubled businesses? The relevant regulation (8 CFR 204.6(j)(4)(ii)) does not give me clear guidance on this issue. Thank you very much for your help.

Answers

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    Reza Rahbaran

    Immigration Attorney
    Answered on

    Under the regulations, the job requirements are number of positions not specific people. Subject to any employment laws or agreements that may be in place with current staff, you are free to replace them with other employees so long as the number of employees are maintained.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    You must preserve the requisite number of jobs but employees may be changed. There may be employment-based restrictions in your state. You should definitely consult an experienced immigration and employment law counsel.

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    Roberto Ortiz

    Immigration Attorney
    Answered on

    If the enterprise is a "troubled business" (having lost 20% of its net worth) it must provide a comprehensive business plan and proof that the existing employees will be retained. USCIS takes the position that 10 jobs must be retained for each investor.

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    Ed Beshara

    Immigration Attorney
    Answered on

    You are correct, investors in a troubled business have to maintain the same number of jobs. However, if there are more investors than required to maintain the same number of jobs then definitely these extra investors can create new jobs.

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    Mahsa Aliaskari

    Immigration Attorney
    Answered on

    For any EB-5 investment, the regulations refer to the actual jobs/positions created or maintained in the case of a troubled business. It will not matter if the specific employee in each position changes. The requirements for qualifying as a troubled business and how the job count works under the regulation and USCIS policy are complex and should be discussed with immigration counsel to ensure you are satisfying the requirements.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    The job count is for full-time positions; it does not matter which employees fill those positions. In the case of a troubled business, you may wish to put the authorized employees in place prior to submitting the I-526 petition. You should consult with an experienced EB-5 immigration attorney to guide you and advise you in this process.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    Interesting question. The regulations governing EB-5 allow an alien investor to qualify for an immigrant visa by making a qualifying investment ($500,000 or $1million) in a troubled business which is defined as a business that has been in existence for >2 years and has incurred a net loss of at least 20% of the company''s net worth. As noted, such investments do not have to create 10 new jobs but the alien investor must show that the number of existing employees is or will be maintained at the pre-investment level. What that means is that as long as you maintain at least the same number of existing employees (pre-investment level), it does not matter whether you change the personnel from the old to the new (ie., switch the employees to your employees, as long as you maintain or hire more than the pre-investment level of total employees working in the business).

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    If the business is failing so that those employees will lose the jobs, then maintaining those jobs may be sufficient, but normally you must add 10 jobs instead of just maintaining jobs that are currently in place. Just replacing the current employees with your own will not suffice.

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    Shahzad Q Qadri

    RC Creator
    Answered on

    Replacing old employees with new employees should not create an issue provided there are no employment law restrictions within your region. However, dealing with troubled businesses is complex, the total value of the business in the past two years should have decreased by at least 20%, and this has to be proven via accounting audits.

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    Philip H Teplen

    Immigration Attorney
    Answered on

    What you suggest is permissible. The idea is to maintain job opportunities but not necessarily the same individual.

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    Boyd Campbell

    Immigration Attorney
    Answered on

    You must maintain the number of jobs. The employees may change and probably will.

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