In 2018, two members of a realty holding LLC sought judicial dissolution based on the death of one of the other members. The operating agreement defines a member’s death as an event of “Dissociation.”...more
11/18/2019
/ Appeals ,
Business Divorce ,
Business Litigation ,
Contract Disputes ,
Contract Negotiations ,
Contract Terms ,
Decedent Protection ,
Dismissals ,
Dissolution ,
Inheritance ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Property Valuation ,
Real Estate Market ,
Rental Property
330 West 85th Street is a prime location on Manhattan’s Upper West Side. At that address sits an elegant, pre-war, 48-unit rental apartment building known as The Rexmere. A 4th floor one-bedroom apartment currently is...more
The title of this post describes not an army maneuver, but the outcome of a recent lawsuit in Delaware Chancery Court for advancement of litigation expenses in which...more
11/4/2019
/ Advancement ,
Amended Complaints ,
Breach of Duty ,
Business Divorce ,
Confidential Information ,
Contract Terms ,
Delaware General Corporation Law ,
Employment Contract ,
Fiduciary Duty ,
Hiring & Firing ,
Indemnity ,
Insider Trading ,
Litigation Fees & Costs ,
Merger Agreements ,
Non-Compete Agreements ,
Non-Solicitation Agreements ,
Post-Termination Acts ,
Pre-Termination Notice ,
Statutory Interpretation
Here we go again — and again and again.
On numerous prior occasions I’ve written about judicial dissolution cases and other infighting among LLC members featuring disputes over membership percentages. ...more
The nationwide landscape of statutes and case law governing judicial dissolution of limited liability companies exhibits more state-to-state similarity than dissimilarity....more
9/23/2019
/ Business Divorce ,
Business Litigation ,
Buyouts ,
Capital Contributions ,
Contract Terms ,
Corporate Purpose ,
Dissolution ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Sale of Assets ,
Statutory Interpretation
Parking lots breed partnership disputes. I’ve litigated them and I’ve written about them, most notably the Kassab saga.
I suppose it’s the untapped development potential of parking lots, especially in flourishing downtown...more
It’s that time of year again, when I offer some lighter fare for poolside consumption consisting of summaries of a few recent decisions of interest involving disputes between business co-owners....more
8/12/2019
/ Breach of Duty ,
Business Divorce ,
Buyouts ,
Contract Terms ,
Dissolution ,
Fiduciary Duty ,
Legal Representatives ,
Limited Liability Company (LLC) ,
Limited Partnerships ,
Minority Shareholders ,
Non-Reliance Clauses ,
Pass-Through Entities ,
Settlement Agreements ,
Shareholder Litigation ,
Shareholder Oppression
If you’re a member of a multi-member LLC, and especially if it’s manager-managed, here’s a reason you might want to check under the hood of your LLC agreement: if the business goes belly up amidst squabbling or worse among...more
I’ve long been intrigued with the frequency of litigation — especially in Delaware Chancery Court — over advancement of legal fees of a corporate director or officer or LLC manager who’s the target of a lawsuit by the entity...more
5/28/2019
/ Advancement ,
Business Divorce ,
Business Litigation ,
Commercial Court ,
Contract Terms ,
Corporate Dissolution ,
Corporate Officers ,
Directors ,
Indemnification ,
Indemnification Clauses ,
Legal Fees ,
Limited Liability Company (LLC) ,
Stock Options
This is the story of a deadlock resolution provision that backfired. It is a long story — 94 pages long to be exact. That is the length of Chancellor Bouchard’s characteristically detailed and thorough post-trial opinion...more
5/20/2019
/ Business Divorce ,
Contract Terms ,
Corporate Deadlock ,
Delaware Limited Liability Company Act ,
Dissolution ,
Limited Liability Company (LLC) ,
Opioid ,
Pain Management ,
Pharmaceutical Industry ,
Prescription Drugs ,
Startups
Before we get to the case: A fixed price buy-sell agreement is one in which co-owners of a business select a specific dollar amount, expressed either as enterprise or per-share value, for calculation of the future buyout...more
Consider the following hypothetical: The operating agreement of an LLC vests management authority in its two members. ...more
What’s a weaponized LLC? It’s one whose operating agreement gives the controlling majority members the authority to dilute, remove from management, or expel a non-controlling minority member, typically for failing to satisfy...more
Very few and very far between are cases in which the holder of a minority membership interest in a New York LLC — with or without a written operating agreement — prevails in an action brought under section 702 of the New York...more
The dog days of August are upon us, a perfect time as I do each year to offer vacationing readers some lighter fare consisting of summaries of a few recent decisions of interest involving disputes between business co-owners....more
8/13/2018
/ Appraisal ,
Business Divorce ,
Business Litigation ,
Business Valuations ,
Buy-Out Agreements ,
Co-Ownership ,
Contract Disputes ,
Contract Terms ,
Judicial Dissolution ,
Jurisdiction ,
NE Supreme Court ,
Partnership Agreements ,
Partnership Interests ,
Partnerships ,
Profit Sharing ,
Shareholders
Three recent court decisions from three different states — New York, Pennsylvania, and Alabama — add to the rogue’s gallery of valuation cases stemming from poorly conceived and/or poorly implemented buy-sell agreements among...more
7/2/2018
/ AL Supreme Court ,
Asset Valuations ,
Business Divorce ,
Buy-Sell Agreements ,
Buyouts ,
Contract Terms ,
Fair Value Standard ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Shareholders
Mediation, as commonly understood in the context of alternative dispute resolution, employs a neutral third party to facilitate negotiation and voluntary agreement between the parties. Unlike arbitration, the mediator does...more
In the annals of business divorce litigation and assorted other disputes between co-owners of closely held business entities, the cause of action for breach of the implied covenant of good faith and fair dealing likely wins...more
The test for judicial dissolution of LLCs under LLC Law § 702, as laid down in 1545 Ocean Avenue, initially asks whether the managers are unable or unwilling to reasonably permit or promote realization of the LLC’s “stated...more
Having read thousands of court opinions during my 30+ years as a litigator, I’ve learned to assume that there are things going on beyond what can be gleaned from the court’s written decision, and that these hidden factors may...more
WARNING: Contractarians may find the following post disturbing. Reader discretion is advised.
Now that I’ve got your attention, consider this:
Under the standard for judicial dissolution of a New York LLC prescribed in...more
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
There’s little doubt in my mind that “business divorce” has achieved name recognition as a distinct subgenre of commercial litigation whose regular practitioners, by dint of experience dealing in and out of court with the...more
1/10/2017
/ Appraisal ,
Business Entities ,
Business Valuations ,
Choice-of-Law ,
Closely Held Businesses ,
Contract Terms ,
Corporate Dissolution ,
Dissolution ,
Freeze-Out Mergers ,
Internal Controls ,
Jurisdiction ,
Mergers ,
Reverse Stock Splits