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The era of the old-fashioned general partnership long ago petered out, largely displaced by subchapter S corporations and, in the last few decades, limited liability companies, both of which allow pass-through taxation...more
In the world of business divorce litigation, this summer saw everything but a slowdown. We witnessed (and blogged about) Justice Crane cap a long-running fair value proceeding with helpful guidance on appraisals and...more
Delaware Chancery Court’s contractarian approach to all things LLC, embedded statutorily in Section 18-1101(b) of the Delaware LLC Act (“It is the policy of this chapter to give the maximum effect to the principle of freedom...more
Business divorce and non-judicial (a/k/a voluntary) dissolution of a business entity rarely intersect. But when they do, or even in a non-business divorce setting, if a business owner needs to rescind a certificate of...more
Count ’em: At the time A sued B for judicial dissolution of one of their several jointly owned companies, there are not one, not two, not three, but eight pending lawsuits between the two 50/50 business partners who first...more
Closely-held business entities come in all shapes and sizes. By definition, under Partnership Law § 10, it takes “two or more” owners to form a general partnership. But corporations and LLCs have no such impediment, ranging...more
“This case (and its many state-court siblings) has a tortured history,” is the opening line in Judge Subramanian’s decision. The “siblings” are five or so related lawsuits filed in New York State Supreme Court beginning in...more
Folks who’ve been following this blog for years know that periodically I like to venture beyond New York’s borders to find and report on interesting decisions from other states in business divorce cases....more
The last time we featured a notable decision on a claim for dissolution of a restaurant-operating LLC was in 2017, with a post by Frank McRoberts titled, “LLC’s Purpose Being Achieved? Business Doing Fine? Good Luck Getting...more
Jury trials in business divorce litigation are uncommon. Bifurcated business divorce jury trials are all but nonexistent. But in Aronov v Khavinson (81 Misc3d 1242(A) [Sup Ct, Kings County Feb. 9, 2024]), we encounter the...more
Capital contributions by business owners are the lifeblood of any newly formed business entity. Typically the lifeblood consists of cash, but not always. In many instances the contribution may consist of tangible (e.g., real...more
There are many paths to a fair value appraisal proceeding. A road less traveled begins at Section 910 of the Business Corporation Law (the “BCL”). ...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
Parallel business divorce proceedings in the same or different courts alleging overlapping or duplicative claims are common. When it occurs, judges must often determine whether to dispose of one so the other may proceed...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
In some cases, owners of an LLC provide in their Operating Agreements that any disputes involving the LLC or arising out of the Operating Agreement, including a business divorce, must be litigated in a private arbitration...more
The books and records demand often is the opening act in business divorce litigation. The relatively low burden that an owner must meet in order to obtain access to a company’s books and records, and the availability of an...more
In a recently published opinion, Hacker v. Fabe, 92 Cal. App. 5th1267 (2023), the California Court of Appeal found that an LLC owner’s destruction of the company’s records was a substantial factor that subjected him to...more
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
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
Imagine devoting years of costly litigation to rescinding a $1 million equity investment in an LLC for fraudulent inducement, prevailing on the merits by clear and convincing evidence after a full trial, but losing anyway...more
In my experience, most operating agreements of New York LLCs include a provision barring amendments unless made in writing and executed by all members. Such provisions are especially prevalent with smaller, member-managed...more
Do New York’s Surrogate’s Courts have jurisdiction to compel an accounting related to a non-party limited liability company in which the decedent’s estate has only a minority interest? ...more
It’s been many years since our last pop quiz for all you business divorce aficionados. Time for another. See how many you get right before you read the answers...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