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Shareholders Business Divorce

Farrell Fritz, P.C.

Special Considerations for Law Firm Breakups

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Just a few weeks ago, I commented on a recent uptick in disputes centered on the breakup of professional services firms. In those disputes, we expect that the demands of the legal, accounting, and medical professions draw...more

Farrell Fritz, P.C.

Court of Appeals Bolsters the Internal Affairs Doctrine, Takes a Stroll Through Scottish Fiduciary Law

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It’s not every day that New York’s highest court considers a question impacting the business divorce cases that we typically litigate.  And even when an interesting business divorce issue does make its way up to Albany, it’s...more

Farrell Fritz, P.C.

And the Award for Most Creative Attempt to Evade a Book Value Buy-Sell Provision Goes To . . .

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“Under any standard of value, the true economic value of a business enterprise will equal the company’s accounting book value only by coincidence . . .” says the late business valuation expert and author Shannon Pratt.  So...more

Farrell Fritz, P.C.

Enforcing the Guardrails on Transactions Involving Interested Directors of Close Corporations

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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

Farrell Fritz, P.C.

Direct to Beneficial: Change of Corporate Ownership Structure Yields No Right to Dissent and Seek Appraisal

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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

Farrell Fritz, P.C.

Winter Case Notes: Murder, Forgery, Accidental Death, Oppression, Oh My!

Farrell Fritz, P.C. on

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

Farrell Fritz, P.C.

Top 10 Business Divorce Cases of 2023

Farrell Fritz, P.C. on

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

Farrell Fritz, P.C.

Proceed with Caution: Strategy Considerations Before Making a Books and Records Demand

Farrell Fritz, P.C. on

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

Lathrop GPM

The Importance of a Buy-Sell Agreement for Business Owners

Lathrop GPM on

If you are the owner of a business that does not have a buy-sell agreement in place, or you have not reviewed your buy-sell agreement recently, it may be time to sit down with your attorney. Buy-sell agreements can be complex...more

Farrell Fritz, P.C.

The Magnolia State Wins the Prize for Novel Alternative Remedies in LLC Dissolution Cases

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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

Farrell Fritz, P.C.

Can a Shareholder Suing Derivatively Face Countersuit Individually?

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That was the interesting, infrequently-litigated question addressed in a recent decision by Manhattan Commercial Division Justice Melissa A. Crane. Simon v FrancInvest, S.A. (2023 NY Slip Op 32422[U] [Sup Ct, NY County...more

Farrell Fritz, P.C.

Summer Shorts: Equitable Contribution, Stock Redemption, and Other Recent Decisions of Interest

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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

Farrell Fritz, P.C.

At-Will Employment Agreement Plus Mandatory Redemption Clause Leaves Minority Shareholder-Employees Out in the Cold

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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

Farrell Fritz, P.C.

Can One 50% Shareholder Sue the Other in the Company Name on the Company Dollar? Answer: It Depends

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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

Marshall Dennehey

Superior Court: Yes, We Actually Mean Actual Authority for an Actual Settlement of a Civil Case

Marshall Dennehey on

Driscoll and King were partners in a venture operating a restaurant. Their relationship soured, and so as not to sour matters for their customers, they sought to separate amicably. The deal was to be that King would buy out...more

Farrell Fritz, P.C.

Derivative Standing and the Internal Affairs Doctrine

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Choice-of-law questions in shareholder derivative lawsuits venued in New York courts involving out-of-state or international entities can be confoundingly difficult, even for appeals court judges....more

Farrell Fritz, P.C.

Misappropriated Watering Hole Becomes Money Judgment Sinkhole

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Occasionally, we come across post-trial decisions with such scathing rebuke of one side that it’s difficult to imagine why the loser ever chose to take the case to trial. O’Mahony v Whiston is a perfect example....more

Robson & Robson, P.C.

Without Equal? Pennsylvania Federal Court Charts New Path, Rules Fiduciary Duty Exists Between 50/50 Co-owners Of A Business

Robson & Robson, P.C. on

There is arguably no more prevalent legal claim in business divorces than a claim of breach of a fiduciary duty. Simply put (and I do mean simply), when one person owes a fiduciary duty to another, the person with the duty...more

Farrell Fritz, P.C.

First Department Recognizes Cause of Action for Specific Performance of LLC Member Voting Agreement

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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

Farrell Fritz, P.C.

When Do Disguised Dividends Add Up to Minority Shareholder Oppression?

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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

Farrell Fritz, P.C.

The Worst of Both Worlds: Untimely Buyout Election Yields Full Merits Hearing and Huge Bond

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Nine months ago, we wrote about a 20% shareholder, Alvin Clayton Fernandes, whose bare bones petition Manhattan Supreme Court Justice Frank P. Nervo found stated sufficient grounds to judicially dissolve a seemingly...more

Robson & Robson, P.C.

Ain’t Nothing Like The Real Thing

Robson & Robson, P.C. on

In Pennsylvania, Manufactured Deadlocks are Unlikely to Trigger Judicial Dissolution - In disputes among the owners of a closely held company, involuntary judicial dissolution is the nuclear option....more

Farrell Fritz, P.C.

Dueling Dissolution Petitions Beget Dissolution Without Consideration of Alternate Remedies

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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

Farrell Fritz, P.C.

The “Conflict of Interest” Defense to Shareholder Derivative Standing

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In shareholder derivative litigation, defendants occasionally argue that the plaintiff – who ostensibly sues on behalf of the company and its owners in a fiduciary capacity – has some form of conflict of interest with the...more

Farrell Fritz, P.C.

Questions Abound in Parallel Cash-Out Merger Rescission / Fair Value Appraisal Lawsuits

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The topic of mergers between two business entities designed to involuntarily extinguish the equity interest of a minority owner in exchange for cash is one of our favorites on New York Business Divorce. Almost invariably...more

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