Managing members of manager-managed New York LLCs owe default fiduciary duties of loyalty and care to non-managing members. Those duties can be modified by the operating agreement....more
Iowa was one of the first states to adopt the 2006 Revised Uniform Limited Liability Company Act. As of this year, 21 others have done so not including New York which continues to limp along with its creaky LLC Law enacted...more
The New York Court of Appeals’ 2012 opinion in Pappas v Tzolis, decided in the wake and spirit of that court’s rulings the year before in the Centro Empresarial v America Movil and Arfa v Zamir cases, raised the bar for...more
The heyday of common-law dissolution — if it ever had one — is long past, largely displaced by a statutory dissolution remedy for oppressed minority shareholders paired with an elective buy-out option for the respondent...more
Anyone who keeps up with the public equity markets knows that the volume of IPOs generated by Special Purpose Acquisition Companies, better known as SPACs, has exploded over the last two years. ...more
Now that I’ve got your attention, relax. At least for New York LLCs, a member can be expelled from an LLC only if expressly authorized by the operating agreement....more
Of late I’ve been ruminating on New York’s membership in the shrinking pool of states that don’t recognize oppression of an LLC minority member by the controlling members or managers as ground for judicial dissolution....more
4/19/2021
/ Books & Records ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Closely Held Businesses ,
Contract Terms ,
Dissolution ,
Fiduciary Duty ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Minority Shareholders ,
Operating Agreements ,
Shareholder Distributions ,
Shareholder Oppression
Fine dining and business divorce crossed paths in a recently decided case featuring a lengthy battle between co-equal ownership factions of the corporation that operates Delmonico’s, the renowned Manhattan restaurant...more
In 1994, in Friedman v Revenue Management, Inc., the U.S. Court of Appeals for the Second Circuit, covering New York, Connecticut and Vermont, closed federal courthouse doors in those states to petitioners seeking judicial...more
What do business divorce litigants have in common with the frill-necked lizard? At the outset of confrontation, they both use in terrorem tactics in an attempt to force their adversary into rapid submission....more
3/22/2021
/ Bank Fraud ,
Business Divorce ,
Derivative Suit ,
Judicial Dissolution ,
Legal Fees ,
Mail Fraud ,
Membership Agreements ,
RICO ,
Standard of Proof ,
Standing ,
Treble Damages ,
Wire Fraud
Here in the New York metro area, for the first time in years winter is living up to its name. The snow-plowed streets and sub-freezing temperatures are a natural setting for this sixth annual edition of Winter Case Notes in...more
2/22/2021
/ Breach of Duty ,
Business Divorce ,
Business Litigation ,
Commercial Court ,
Corporate Deadlock ,
Corporate Dissolution ,
Fiduciary Duty ,
Law Firm Partners ,
Limited Liability Company (LLC) ,
Tax Exempt Entities ,
Tax Fraud
It’s not unusual to find buy-out provisions in shareholder and operating agreements that commit the pricing of the buy-out to the “final and binding” determination of one or more appraisers. The same agreements also may...more
2/15/2021
/ Appraisal ,
Arbitration Agreements ,
Arbitration Awards ,
Business Divorce ,
Buy-Out Agreements ,
Closely Held Businesses ,
Contract Terms ,
Fair Market Value ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
PricewaterhouseCoopers ,
Repurchase Agreements ,
Shareholders
Three weeks ago, I wrote about the Bak v Rostek case in Brooklyn Supreme Court addressing the duty to disclose third-party offers amidst buy-out negotiations between co-owners. ...more
2/1/2021
/ Aiding and Abetting ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Buy-Out Agreements ,
Corporate Sales Transactions ,
Duty to Disclose ,
Fiduciary Duty ,
Fraudulent Inducement ,
Limited Liability Company (LLC) ,
Purchase Agreement ,
Unjust Enrichment
For law bloggers, if there’s one thing more satisfying than writing about an important new court decision, it’s writing about an important new court decision that you won for your client....more
In 2011 and 2012, the New York Court of Appeals decided a series of difficult cases addressing the circumstances under which a contractual waiver or release included in a buyout or other agreement between co-owners of closely...more
I’m very pleased to present my 13th annual list of the past year’s ten most significant business divorce cases.
This year’s list includes important appellate and trial court decisions in New York and Delaware on a...more
“I don’t get no respect” was a famous Rodney Dangerfield comedy routine. It also could be ascribed albeit less comedically to tiebreakers assigned the often thankless task of resolving deadlock between 50/50 owners or...more
Gurney’s Inn is an iconic oceanside resort located in Montauk, New York, on the eastern tip of Long Island’s South Fork affectionately known as “The End.”...more
The restaurant business is on the skids amid the COVID-19 pandemic. Yelp reports that 60% of closed restaurants won’t re-open.
Apart from the pandemic, the success rate for new restaurants is dauntingly low. Surveys show a...more
When the management of a closely held business is controlled equally by two owners, it’s wise both to anticipate possible deadlock over major decisions and to provide in the constitutive documents a deadlock breaking...more
Don’t Miss the 2020 LLC Institute Virtual Meeting!
It’s that time of year again, when leading experts and practitioners in the field of closely held business entities gather for the LLC Institute’s spectacular CLE program....more
Interview with Bob Ambrogi on This Week In Legal Blogging -
Last week I had the pleasure of being interviewed for a live webcast by blogging pioneer, legal journalist, and LexBlog publisher and editor-in-chief Bob Ambrogi...more
“The Company is formed for any valid business purpose”
Nine seemingly benign words in the garden-variety operating agreement of a realty holding LLC. Nine words that, as one judge opined under similar circumstances some...more
There’s tremendous diversity from state-to-state when it comes to statutory and judge-made law in business divorce cases. The basic fact patterns one sees in cases from across the country, however, don’t vary nearly as much....more
9/14/2020
/ Business Divorce ,
Business Valuations ,
Buyouts ,
Dissolution ,
Distribution Rules ,
Fair Value Standard ,
Family Businesses ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Receivership ,
Shareholders ,
Shareholders' Agreements ,
Stock Transfer
With apologies to the King James Bible, what the Manhattan real estate market giveth, a poorly conceived partnership agreement taketh away.
It’s the best explanation I can offer for three successive lawsuits lasting almost...more