In my business divorce practice I deal with many closely held corporations that have only a few or perhaps just two shareholders, each of whom is actively involved in running the business. Within that category are many...more
Welcome to this year’s Winter Case Notes where, amidst the arctic blast currently sweeping most of the nation, I offer shortish takes on several court decisions in recent business divorce cases.
This year’s edition...more
Some years are easier than others to select the most significant business divorce cases. In this, the 16th year I’ve published this top-10 list, the task is made especially difficult by a veritable flood of court decisions...more
12/27/2023
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Business Ownership ,
Fiduciary Duty ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Shareholders
New York courts are not in the vanguard when it comes to devising less drastic, alternative remedies in LLC judicial dissolution cases.
In their defense, there’s nothing in Article 7 of New York’s LLC Law that expressly...more
Welcome to the 13th annual edition of Summer Shorts. This year’s edition features brief commentary on five recent decisions by New York courts in a variety of business divorce cases involving equitable contribution among...more
In the menagerie of closely held companies, those owned and controlled by 50/50 business partners pose unique benefits and challenges.
On the benefit side, co-equal ownership and control can foster cooperation,...more
Statutory fair value appraisal proceedings in New York come in two flavors. First, there’s the buy-out appraisal under Business Corporation Law § 1118 triggered by a minority shareholder’s petition for judicial dissolution....more
De facto dividend. Disguised dividend. Constructive dividend. They all refer to the same thing: monies in excess of reasonable compensation taken by owners of closely held companies, booked as deductible employment...more
The pictured architectural rendering of the sunlit Kings County Supreme Courthouse at 360 Adams Street, completed in 1957, doesn’t quite capture the reality of its dour, hulking presence in downtown Brooklyn. Its design...more
7/5/2022
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Corporate Waste ,
Derivative Suit ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Misappropriation ,
Ownership Interest ,
Shareholders ,
Standing
In 2008, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery — one of the many intellectual giants and gifted writers who’ve occupied seats on that bench — published an article in the Delaware Journal of...more
Serving dual roles as urban homestead and non-profit business operation, residential condominiums and co-ops occupy a special niche in the arena of dispute resolution among co-owners of joint enterprises....more
Welcome to this 11th annual edition of Summer Shorts! This year’s edition features brief commentary on half a dozen business divorce cases of interest from across the country. ...more
8/30/2021
/ Business Divorce ,
Buyouts ,
Contract Terms ,
Fair Value Standard ,
Family Businesses ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Limited Partnerships ,
Membership Interest ,
Operating Agreements ,
Shareholders
My partner Frank McRoberts recently posted about two New York cases, one involving an LLC and the other a close corporation, in which the courts resolved conflicts between, on the one hand, provision in the...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
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
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
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
New York’s Business Corporation Law (BCL) provides three pathways for non-controlling shareholders to achieve involuntary (judicial) dissolution. ...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
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
Business divorce cases more often than not include claims against the controlling owners for diversion or waste of company assets, usurpation of corporate opportunity, taking excessive compensation and the like. The party...more
The discoverability of materials in civil litigation in general resists any hard and fast rules, other than that the scope of discovery is broadly defined and liberally applied under the rules of civil procedure in both state...more
Last month gave us three noteworthy post-trial decisions in three different cases from three different states, all centering on disputes among business co-owners over the ownership and exploitation of the businesses’s core...more
12/3/2018
/ Business Divorce ,
Copyright ,
Corporate Dissolution ,
Derivative Suit ,
Family Businesses ,
Infringement ,
Intellectual Property Protection ,
IP License ,
License Agreements ,
Limited Liability Company (LLC) ,
Patents ,
Shareholders ,
Trademarks
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
Shareholders A and B are the sole shareholders of a real estate holding corporation. Their shareholders’ agreement includes provisions that...more