The owners’ agreement is the backbone of the closely-held business. In intracompany LLC disputes, few things are more important than what the operating agreement has to say on the subject. As a consequence, the pages of...more
The distinction between direct and derivative claims pervades business divorce litigation. Whether a dissident owner’s claim against his or her co-owners is a direct claim (one that the owner can assert in their individual...more
At the beginning of last year, I wrote a eulogy for the equitable accounting cause of action in business disputes: But What of the Equitable Accounting? The gist was that perhaps due to its potential potency, and certainly...more
The authors of this blog have a special affinity for fair value appraisal proceedings. The narrow hearings—where the sole issue before the court is the fair value of an owner’s interest in a business—require attorneys and...more
MiniCorp has five shareholders, all of whom are employees. Each shareholder’s employment agreement states that they are an at-will employee of MiniCorp, and the shareholders agreement provides that when a shareholder’s...more
I previously wrote that one of the most difficult periods in the lifecycle of a closely held business is the period following the death of an owner, due to the tension between the remaining owners wishing to continue the...more
Over its three-decade rise to the closely-held business entity of choice, the Limited Liability Company has won a special place in our hearts. The majority of disputes we litigate and blog about concern ownership of or...more
Resolving ownership disputes with a buyout at auction has a tempting simplicity. The buyout gives the owners the divorce they need. And the auction—particularly a blind auction, in which no owner is aware of the other’s...more
When a minority shareholder petitions for dissolution of a corporation on the grounds of oppressive or illegal conduct (see BCL 1104-a), Section 1118 of New York’s Business Corporation Law allows the corporation or any other...more
In 1941, two of the three shareholders of Ringling Bros.-Barnum & Bailey Combined Shows, Inc. entered into an agreement stating that they would vote their combined 630 of the outstanding 1000 shares of Ringling Bros. stock...more
4/10/2023
/ Board of Directors ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Contract Terms ,
Corporate Governance ,
Director Nominations ,
Limited Liability Company (LLC) ,
Private Right of Action ,
Shareholders ,
Voting Rights
Having spent the better part of my career litigating disputes between minority and majority owners of closely-held businesses, I can comfortably say that all else equal, I would prefer to be a minority shareholder of a New...more
Commercial Division Rule 11-b governs a party’s obligation to produce a log of documents withheld on the basis of privilege. Enacted in 2014, Rule 11-b substantially streamlines the privilege log process by encouraging...more
One of the most difficult periods in the lifecycle of a closely-held company is the period following the death of an owner. Apart from having to fill whatever business responsibilities the deceased owner left behind, the...more
This blog frequently covers cases considering a shareholder’s request to dissolve a corporation under New York’s oppression-based corporate dissolution statute, BCL 1104-a. That statute allows a shareholder to petition for...more
The dissolution of a company—and the winddown and liquidation that usually follow—often impacts a broad range of stakeholders beyond just the owners of the company, including creditors and potential creditors, who often are...more
The members of Nite Cap’s owner, Bull-Poet, LLC, recently traded the full sheets and gentle seas of the Hudson for the strum and drang of litigation in New York’s Supreme Court. But the squall has passed; thanks to New York...more
Ask a trial lawyer what he or she would give to have an expert witness as effective as Mona Lisa Vito, the third-generation mechanic/out-of-work hairdresser whose testimony on positraction saved the day in Judge Chamberlain...more
It is no secret by now that remote proceedings are here to stay. Driven at first by the safety protocols related to the COVID-19 pandemic, remote proceedings have outlived those protocols, and they remain the preferred forum...more
11/10/2022
/ Business Litigation ,
Comment Period ,
Commercial Court ,
Depositions ,
Evidence ,
Judicial Proceedings ,
Litigation Strategies ,
New York ,
Public Comment ,
Remote Proceedings ,
Rules of Court
One of the earliest signs that a closely-held business is headed for divorce lies in how its owners treat new opportunities. When the relationship among the owners reaches a certain level of distrust, an owner presented with...more
New York’s default rules regarding LLC members’ rights to transfer their interests appear in sections 603 and 604 of the LLC Law. Section 603 provides that a membership interest is fully assignable, but the assignee does not...more
9/19/2022
/ Acquiescence ,
Business Divorce ,
Business Litigation ,
Contract Terms ,
Default ,
Equitable Defenses ,
Limited Liability Company (LLC) ,
Loans ,
Membership Interest ,
Operating Agreements ,
Transfer of Interest ,
Void ab initio
Nestled between Broadway and Church Street in New York City’s hottest neighborhood is the landmarked, stone-façade building at 66-68 Reade Street. Now marketed as the superluxury boutique condominium complex 66 Reade, the...more
8/22/2022
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Buy-Sell Agreements ,
Capital Calls ,
Fiduciary Duty ,
Fraudulent Inducement ,
Operating Agreements ,
Real Estate Development ,
Self-Dealing
Litigation in the Commercial Division is efficient and effective in part because its judges strictly enforce the Commercial Division Rules. Those unsure can peruse Matt Donovan’s “Check the Rules” series on this blog,...more
Some of the most complex and hotly-contested business divorce litigation arises from the dissolution of law firms. Perhaps law firm dissolutions are prone to litigation because many are organized as partnerships or LLPs, and...more
7/11/2022
/ Business Disputes ,
Business Divorce ,
Business Litigation ,
Collateral Estoppel ,
Contingency Fees ,
Corporate Dissolution ,
Judicial Estoppel ,
Law Firm Ownership ,
Limited Liability Partnerships ,
Partnership Agreements ,
Partnerships
The emergence of the Limited Liability Company as the preferred form of closely-held business association in New York has spawned a glut of litigation over disputed membership status in LLCs, many of which are covered in the...more
As we approach the 30th Anniversary of New York’s Commercial Division, it’s fair to say that over those 30 years, the Commercial Division has held true to its aim of improving the efficiency and judicial treatment of complex...more