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Dollars, Donuts, and Buy-Sell Options

Buy-sell agreements come in all shapes and sizes. Some are straightforward. Others are outrageously complex, especially purchase price formulas. Some have triggers for death. Others disability. Retirement. Expulsion....more

Limo Company Shareholders Can't Hitch a Ride in Derivative Litigation

Closely-held business entities come in all shapes and sizes. By definition, under Partnership Law § 10, it takes “two or more” owners to form a general partnership. But corporations and LLCs have no such impediment, ranging...more

Direct to Beneficial: Change of Corporate Ownership Structure Yields No Right to Dissent and Seek Appraisal

There are many paths to a fair value appraisal proceeding. A road less traveled begins at Section 910 of the Business Corporation Law (the “BCL”). ...more

Can a Shareholder Suing Derivatively Face Countersuit Individually?

That was the interesting, infrequently-litigated question addressed in a recent decision by Manhattan Commercial Division Justice Melissa A. Crane. Simon v FrancInvest, S.A. (2023 NY Slip Op 32422[U] [Sup Ct, NY County...more

Derivative Standing and the Internal Affairs Doctrine

Choice-of-law questions in shareholder derivative lawsuits venued in New York courts involving out-of-state or international entities can be confoundingly difficult, even for appeals court judges....more

Misappropriated Watering Hole Becomes Money Judgment Sinkhole

Occasionally, we come across post-trial decisions with such scathing rebuke of one side that it’s difficult to imagine why the loser ever chose to take the case to trial. O’Mahony v Whiston is a perfect example....more

The Worst of Both Worlds: Untimely Buyout Election Yields Full Merits Hearing and Huge Bond

Nine months ago, we wrote about a 20% shareholder, Alvin Clayton Fernandes, whose bare bones petition Manhattan Supreme Court Justice Frank P. Nervo found stated sufficient grounds to judicially dissolve a seemingly...more

The “Conflict of Interest” Defense to Shareholder Derivative Standing

In shareholder derivative litigation, defendants occasionally argue that the plaintiff – who ostensibly sues on behalf of the company and its owners in a fiduciary capacity – has some form of conflict of interest with the...more

Questions Abound in Parallel Cash-Out Merger Rescission / Fair Value Appraisal Lawsuits

The topic of mergers between two business entities designed to involuntarily extinguish the equity interest of a minority owner in exchange for cash is one of our favorites on New York Business Divorce. Almost invariably...more

Enforceability of Oral Operating, Shareholder, and Partnership Agreements

Oral agreements – and oral modifications of written agreements – are a constant source of litigation in business divorce cases. Alleged oral agreements are subject to attack based upon legal enforceability – as well as their...more

Who Is a “Control” Person for Purposes of the Dissolution Statute’s Surcharge Provision?

Section 1104-a of the Business Corporation Law (the BCL) empowers courts to dissolve a corporation if the petitioning shareholder can establish either of two specified grounds for dissolution. Section 1104-a(a)(1) authorizes...more

Resignation: Antidote for Internal Dissention and Deadlock?

There are countless New York corporations in which the owners are equal 50/50 shareholders and co-members of a two-member board. Where one sues the other for judicial dissolution, and the ground for dissolution is “deadlock”...more

Basics of Valuation Proceedings – Litigating an Appraisal from Start to Finish – Part 2

...So you, or your client, have found yourself in an appraisal proceeding. The question then becomes: What are the legal rules, principles, and standards that apply in the valuation proceeding itself? That is the subject of...more

Basics Of Valuation Proceedings – Litigating An Appraisal From Start To Finish – Part 1

Last month, seasoned business appraiser Andy Ross of Getty Marcus CPA, P.C., and I made a presentation at the Nassau County Bar Association about appraisal proceedings in business divorce cases. With the subject of business...more

Surrogate’s Court Declines to Order Demise of Fashion Business

When you want to sue to dissolve a business in New York on behalf of the estate of a deceased shareholder, to which court should you go: Supreme or Surrogate’s Court? ...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

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

An Oppression How-To: Revoke Employment, Profit Sharing and Control

An earlier post on this blog, examining a post-trial decision in Matter of Digeser v Flach, 2015 NY Slip Op 51609(U) [Sup Ct Albany County Nov. 5, 2015], described the minority shareholder’s dissolution claim under Section...more

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