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It’s a Partnership! No, It’s an LLC! No, It’s Both!

In 1981, three partners formed a general partnership to own and operate a rental property. Their partnership agreement fixed a 30-year term, to 2011. In 2003, the partners formed a new LLC maintaining the same ownership...more

Episode 013: Interview with Justice Carolyn E. Demarest (Ret.) on Business Divorce Litigation [Audio]

During her many years as Presiding Justice of the Brooklyn Commercial Division, New York Supreme Court Justice Carolyn E. Demarest (Ret.) decided some of the most important and challenging business divorce matters including...more

Minority Shareholders’ Derivative Suit Foiled by Voiding of Corporation’s Charter for Nonpayment of Taxes

A business’s failure to pay state taxes can be a problem if the entity later wants to bring a lawsuit, or its non-controlling owners want to sue on the entity’s behalf....more

In Dispute Over Partnership’s Conversion to LLC, Court Finds No Duty to “Spoon-Feed” Sophisticated Investor

Pay attention to your K-1s or they may come back to bite you, is the lesson of Bruder v Hillman, Docket No. A-5055-15T1 [N.J. Super. Ct. App. Div. June 27, 2017], decided last week by a New Jersey appellate panel which...more

Appraisers’ Valuations Are Light-Years Apart, But Does That Make Them Hired Guns?

The title of this post notwithstanding, the judge’s decision in the recent, high-stakes stock valuation case I’m about to describe, featuring a clash of business appraiser titans whose conclusions of value differed by almost...more

Then There Were Two: Court Rejects Minority Shareholder’s Claim of Wrongful Termination Under Founders Agreement

A company has four founding shareholders each of whom is a director-employee. Their agreement provides that the votes of three out of four founders are required to terminate the employment of any founder or to approve a...more

Federal Court No Mecca for Business Divorce Litigants

Civil litigation in federal court can be a luxury experience. The quality of the judiciary is superb. Federal judges often give their cases substantial individualized attention. Lawsuits progress relatively quickly. The...more

Finding No “Therapeutic” Benefit to Corporation, Court Denies Fee Award in Discontinued Shareholder Derivative Action

At first glance, you might think the plaintiff minority shareholder in Sardis v Sardis, 2017 NY Slip Op 27163 [Sup Ct Suffolk County May 11, 2017], achieved her derivative lawsuit’s goal when the defendant controlling...more

“Food Fight” Sequel Ends Badly for Ousted Sibling

A little over three years ago I reported on the first round of a fascinating “food fight” among four siblings, each of whom is a 25% shareholder of a Brooklyn-based, second-generation food distributor known as Jersey Lynne...more

Delaware Ruling Highlights Difference With New York Over Amending LLC Agreements

The common perception among practitioners familiar with the business entity laws of New York and Delaware is that Delaware law generally is friendlier to, and more protective of, majority ownership and management interests....more

Assignment of LLC Interest Defeats Standing Despite Alleged Lack of Consideration

The rules of “standing” in business divorce litigation generally require that the plaintiff have an ownership interest in the business entity at the time of the alleged wrongful conduct and, for derivative claims brought on...more

Aim Carefully Before Pulling Trigger on Shotgun Buy-Sell Agreement

At least on paper, shotgun provisions in shareholder and operating agreements provide an elegant and efficient buy-out solution when business owners can’t get along and need a divorce. In a two-owner company, the one who...more

Suing on Behalf of People You’re Suing Can Sink a Derivative Lawsuit — Especially If You Have a Litigious Nature

The U.S. reportedly has the world’s highest number of lawyers per capita (1 for every 300 people) and the 5th highest number of lawsuits per capita (74.5 for every 1,000 people, topped only by Germany, Sweden, Israel, and...more

Episode 12: Forensic Analyses in Valuation – Interview with Jaime d’Almeida of Duff & Phelps  [Audio]

Forensics means different things to different people in different contexts. But what does it mean in the context of valuing equity interests in closely held business entities? You’ll learn the answer – and a lot more – in...more

Withdraw a Dissolution Claim? Not So Fast

Article 11 of the Business Corporation Law governs dissolution of closely held New York business corporations. Article 11 has existed, more or less in its current form, for decades. Some of its provisions have been heavily...more

Business Divorce Nation: Five States, Five Cases

It’s true that the statutory and common-law rules at play in business divorce cases can vary widely from state to state. But it’s also true that court decisions in one state can influence courts in other states, and can...more

Episode 1: Chris Mercer Interview on Marketability Discount: Part 1 [Audio]

The premiere episode of Business Divorce Roundtable starts out with a bang or, more accurately, Part One of a two-part interview with one of the nation’s leading business appraisers, Chris Mercer, discussing the controversy...more

Episode 2: Chris Mercer Interview on Marketability Discount: Part 2 [Audio]

If you haven't already listened to Episode 1/Part 1 of my interview with Chris Mercer, in which Chris discusses the fundamentals of the controversy surrounding application of the marketability discount in statutory fair value...more

Episode 3: Professor Peter Molk Interview on Drafting Around LLC Default Rules [Audio]

In this episode, Prof. Peter Molk of the Willamette University College of Law discusses his groundbreaking study and forthcoming law review article on how LLC owners draft their agreements to strengthen or weaken the owner...more

Episode 4: John Cunningham Interview on Avoiding LLC Deadlock [Audio]

A huge percentage of limited liability companies consist of two co-equal, 50% members, which poses the danger of management deadlock and dysfunction leading to dissolution or other litigation. In this episode, you'll hear my...more

Episode 5: Business Divorce, Delaware Style [Audio]

The Chancery Court of Delaware is considered by many to be the most influential U.S. court when it comes to business law, mostly due to that state's dominant role as the preferred state of incorporation of publicly held...more

Beware Diversity Trap in Federal Court Business Divorce Cases Involving LLCs

I can count on one hand the number of federal court cases I’ve featured on this blog since I started it almost 10 years ago — and that’s no coincidence....more

Episode 6: Tom Rutledge Takes on LLC Member Expulsion  [Audio]

Expulsion a/k/a dissociation of an LLC member is a hot-button topic whether it’s pursuant to the terms of an operating agreement or by court order. This episode of the Business Divorce Roundtable features an interview with...more

Episode 7: Conflict in the Family-Owned Business: A Conversation with Professor Benjamin Means  [Audio]

As many litigators will tell you, “business divorce on steroids” aptly describes the tenor of litigation that can erupt when members of a family-owned business have a falling out. No one has devoted more scholarship to the...more

A Pair of Unbrotherly Business Altercations Go to Trial

Like most civil cases, the vast majority of business divorce disputes get resolved before trial, which is disappointing for us voyeurs since only at trial with live witnesses undergoing cross examination does one get the full...more

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