New York’s Business Corporation Law (BCL) provides three pathways for non-controlling shareholders to achieve involuntary (judicial) dissolution. ...more
The COVID-19 pandemic kept New York’s courthouses dark the last few months, but it didn’t slow down the output of decisions by Commercial Division judges. If anything, the pause of new case filings and non-emergency motions...more
Three shareholders co-own an 8-year old internet-based “marketeer” business that imports Chinese-manufactured sinks, faucets, and related plumbing fixtures that it sells primarily to distributors and retailers in the United...more
LLC enabling legislation swept the country in the late 1980s through the mid 1990s. By the turn of the century we saw a trickle of litigation working its way through the courts involving disputes among LLC co-owners. A decade...more
I was especially drawn to the case I’m about to introduce involving LLC member withdrawal, owing to the Jacobs v Cartalemi case that I litigated to a successful conclusion about two years ago, also involving member...more
1/27/2020
/ Breach of Contract ,
Business Divorce ,
Buyouts ,
Commercial Property Owners ,
Default ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Members ,
Membership Interest ,
Motion to Dismiss ,
Operating Agreements ,
Right of First Refusal ,
Withdrawal
Not for the first time, I find myself intrigued by the federal courts’ resistance to hearing state law claims for judicial dissolution of business entities where subject matter jurisdiction otherwise exists based on diversity...more
1/13/2020
/ Breach of Duty ,
Business Divorce ,
Business Entities ,
Business Litigation ,
Commercial Court ,
Commercial Leases ,
Common Law Claims ,
Contract Renewal ,
Damages ,
Derivative Suit ,
Dissolution ,
Fiduciary Duty ,
First Impression ,
Holding Companies ,
Investment ,
Judicial Dissolution ,
Nonprofits ,
Shareholder Litigation ,
Shareholder Rights ,
Shareholders ,
State Law Claims ,
Statutory Interpretation ,
Statutory Violations ,
Subject Matter Jurisdiction ,
Unjust Enrichment
This year’s list offers a good mix of business entities: six involve disputes among LLC members, two involve law firms organized as limited liability partnerships, one involves an accounting firm organized as a professional...more
12/30/2019
/ #MeToo ,
Bad Faith ,
Business Divorce ,
Conflicts of Interest ,
Corporate Culture ,
Corporate Deadlock ,
Damages ,
Defense Strategies ,
Dissolution ,
Employer Liability Issues ,
Employment Litigation ,
Family Businesses ,
First Impression ,
General Partner ,
Holding Companies ,
Hostile Environment ,
Judicial Dissolution ,
K-1 ,
Limited Liability Company (LLC) ,
Minority Shareholders ,
Sexual Harassment ,
Shareholder Oppression
In the end, it wasn’t much of a fight.
The case of Huggins v Scott, decided last month by Justice W. Franc Perry of the Manhattan Supreme Court, illustrates anew the well-nigh insurmountable hurdle faced by a minority...more
12/9/2019
/ Books & Records ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Contract Disputes ,
Fiduciary Duty ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Receivership
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
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
In my business divorce travels occasionally I encounter instances in which shareholder distributions are made in the period between the valuation date for an elective buyout of a minority shareholder who sued for dissolution...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
What makes someone a member of an LLC?
It’s a question that frequently arises in business divorce cases involving LLCs that have no written operating agreement much less certificated membership interests. ...more
Many thousands of closely held corporations, limited liability companies, and limited partnerships formed under Delaware law (and, to a much lesser extent, other foreign states) make their home in New York....more
Last week’s post examined an unusual case in which the court appointed a temporary receiver of an LLC pending the adjudication of the minority members’ petition for judicial dissolution....more
The limited liability company did not exist as a legally recognized business entity in New York when I first began handling business divorce cases in the 1980s. Decades later, the LLC is “King of the Hill,” having displaced...more
Normally you don’t associate the lucrative sale of a closely held business with bitter disputes among the co-owners leading to judicial dissolution proceedings. When the cake is big enough, the thinking goes, each owner walks...more
6/24/2019
/ Business Ownership ,
Business Succession ,
Business Transfer Agreements ,
Closely Held Businesses ,
Family Businesses ,
Forum Selection ,
Judicial Dissolution ,
Post-Closing Rights ,
Selling a Business ,
Stock Ownership ,
Succession Planning
As it approaches its sixth anniversary with little sign of letting up, the highly contentious litigation between brothers and business partners NIssim and Avraham Kassab is the gift that keeps on giving, at least to us...more
Most judicial dissolution cases in New York courts involve a single entity. When the target of dissolution is structured as a holding company for one or more operating or asset-based companies with asymmetric management, the...more
The litigation arsenal of business divorce lawyers contains weapons of varying firepower. The choice of weapon for any particular assignment will depend on many factors including the type and size of the business; whether the...more
What’s become known as the bad-faith petitioner defense in judicial dissolution proceedings first emerged in Matter of Kemp & Beatley, 64 NY2d 63 [1984]...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
In the judicial dissolution case that John (“Jake”) Feldmeier brought after resigning as the highly paid president of the family-owned business, the central issue over which he and his opposing siblings fought was whether the...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