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NY Business Divorce Information on Dissolution and Other Disputes Among Owners of New York Corporations, LLCs and Partnerships

Tag Archives: Warshawsky

Pizza Wars of the Shareholder Kind

Posted in Dissolution Procedure, Grounds for Dissolution, Interim Remedies, Receivership

With about 1,300 pizzerias in New York City, it’s inevitable that some of them wind up the subject of involuntary corporate dissolution proceedings, such as the one recently decided by Nassau Commercial Division Justice Ira Warshawsky in Matter of DiMaria involving a petition brought by a minority owner alleging shareholder oppression and majority owners counter-alleging that the petitioner himself engaged in wrongful conduct. Learn more in this week’s New York Business Divorce.

“So If We Shut the Lights on This Sucker” and Other Things Not to Say on Tape When Squeezing Out a Fellow Shareholder

Posted in Interim Remedies

When you can’t be a fly on the wall, a discreetly placed tape recorder may be the next best thing. That, at least, is one of the lessons taught by Feinberg v. Silverberg, decided last month by Nassau County Justice Ira Warshawsky, in which the court granted a preliminary injunction in a shareholder dispute based on tape recordings that captured the defendant planning to oust his business partner. Don’t miss it in this week’s New York Business Divorce.

New York and Delaware Courts Clarify Petitioner Standing to Bring Books and Records Proceedings

Posted in Access to Books and Records, Delaware

A decision last month by Nassau County Commercial Division Justice Ira Warshawsky, and two recent decisions by the Delaware Chancery and Supreme Courts, clarify issues of standing and scope in proceedings under the business corporation and LLC statutes for inspection of company books and records. Read more in this week’s New York Business Divorce.

The Emerging Influence of 1545 Ocean Avenue on Judicial Dissolution of LLCs

Posted in LLCs

The Appellate Division, Second Department’s breakthrough decision in the 1545 Ocean Avenue case, in which the court redefined the standard for judicial dissolution of LLCs, recently marked its one-year anniversary. This week’s New York Business Divorce looks at several recent trial court decisions by Justices Warshawsky, Strauss and Pines in LLC dissolution cases to see how the new standard has fared.

Sassower Case Illustrates Anew the Price of Poorly Drafted Buy-Sell Agreement

Posted in Buyout, Valuation

This week’s New York Business Divorce revisits the buy-out valuation contest going into its third year in Sassower v. 975 Stewart Avenue Associates, LLC, on the occasion of a recent decision by Justice Ira B. Warshawsky rejecting the parties’ dueling motions for summary judgment on the question whether the mortgage balance should be deducted from the subject company’s sole real estate asset in determining the purchase price of the minority interest being valued.

Ruling on Valuation Discounts for Marketability, Built-In Gains Tax Ends Rift Among New York Appellate Courts

Posted in Buyout, Dissenting Shareholder Appraisal, Fair Market Value vs. Fair Value, Valuation, Valuation Discounts

The Appellate Division, Second Department last week affirmed the key rulings by Justice Ira Warshawsky in the Murphy v. U.S. Dredging valuation case, including his application of a marketability discount to entire enterprise value rather than limiting it to good will. Learn more in this week’s New York Business Divorce.

Court Denies Arbitration of Corporate Dissolution Petition Notwithstanding Broad Clause

Posted in Arbitration and Mediation

Courts generally will enforce broad arbitration clauses in shareholders’ agreements to compel arbitration of corporate dissolution disputes. This week’s New York Business Divorce highlights an interesting, recent decision by Justice Ira B. Warshawsky in which he denied a request to compel arbitration of a dissolution petition based on limiting language in a separate termination clause in the shareholders’ agreement.

Neither Statute Nor Public Policy Supports Buyout Right of Terminated Professional Corporation Shareholder

Posted in Professional Corporations

As if we needed another lesson in the perils of failing to enter into a written shareholders’ agreement, last week the Appellate Division, Second Department, affirmed a lower court ruling rejecting a buyout demand by the expelled shareholder of a law firm organized as a professional corporation. It’s in this week’s New York Business Divorce.

Beware Unreasonable Restraints on Alienation When Drafting Shareholder and Operating Agreements

Posted in Arbitration and Mediation, Buyout, LLCs, Operating Agreement, Stock Transfer Restrictions

Shareholder and operating agreements typically contain provisions restricting the right to transfer stock or membership interests. A recent decision by Justice Ira Warshawsky in Verderber v. Commander Enterprises Centereach, LLC, in which he refused to grant a preliminary injunction enforcing a transfer restriction, prompts this week’s New York Business Divorce to examine the ancient rule against unreasonable restraints on alienation.

Court Determines Fair Value in Dissenting Shareholder Case Triggered by REIT Conversion

Posted in Dissenting Shareholder Appraisal

A one-of-a-kind, high-stakes dissenting shareholder appraisal proceeding is the subject of a fascinating decision by Justice Ira Warshawsky, in which he tackles disputes over trapped-in capital gains, marketability and minority discounts, widely disparate expert valuations, and entitlement to attorney’s fees and interest. Read about it in this week’s New York Business Divorce.

Appellate Court Upholds Denial of Good Will Appraisal in Deadlock Dissolution Case

Posted in Professional Corporations, Valuation

Fights over the good will value of a business are not uncommon in corporate dissolution and buyout proceedings. In this week’s New York Business Divorce, read about a recent appellate decision holding that courts lack authority to appraise good will post-dissolution in the absence of an agreement of the parties that good will is a distributable asset of the corporation.

Case Illustrates Importance of Clear Valuation Parameters in Buy-Sell Agreement Among Owners of Closely Held Business

Posted in Buyout, Valuation

Including buy-sell provisions in a shareholders’ or operating agreement is a good idea, but if the agreement fails to clearly define basic valuation parameters it may lead to the very litigation that the agreement was intended to avoid. Case in point: Justice Ira Warshawsky’s recent decision in Sassower v. 975 Stewart Avenue Associates, LLC, featured in this week’s New York Business Divorce.

Court Grants Dissolution, Rejects Claim that Failed Buy-Sell Agreement Was “Ploy” by Petitioner to Take Over Corporation’s Retail Store Lease for His New Business

Posted in Buyout, Dissolution Defenses, Dissolution Procedure, Grounds for Dissolution

Two feuding 50-50 shareholders enter a buy-sell option agreement in which either one can offer his shares to the other at a fixed price and, if the offer is declined, the corporation is voluntarily dissolved. One of them later offers his shares. The other declines. Sounds like simple plan to avoid a messy court battle, right? Not quite, as you’ll find out in this week’s New York Business Divorce discussing a recent decision by Justice Ira Warshawsky.

Court Rejects Bid by Corporate Dissolution Petitioner to Voluntarily Withdraw Case Without Prejudice

Posted in Dissolution Procedure, Grounds for Dissolution

If you’re going to accuse your business partner of bad acts and ask for judicial dissolution of the business, be prepared to settle or take the case all the way to trial. That seems to be the message given to the petitioner in a recent case highlighted in this week’s New York Business Divorce, when the court turned down her request to withdraw the case “without prejudice.”

Terminated Member of Professional Corporation is Not Entitled to Statutory Stock Redemption

Posted in Buyout, Partnerships, Professional Corporations, Standing

Professional service corporations are “interesting” and “strange creatures”, says Justice Ira B. Warshawsky in a recent decision rejecting a claim for statutory buyout in a suit brought by a terminated partner in a law firm organized as a professional corporation. Get the story in this week’s New York Business Divorce.

Certified Partisan Accountant? Court Allows LLC Member’s Suit Against Company’s CPA, Alleging Improper Assistance to Other Member in Judicial Dissolution Proceeding

Posted in Accountants/Experts

When company co-owners fight, “Duck for cover!” may be the best advice for the company’s outside accountant. In this week’s New York Business Divorce, read about a CPA firm that got caught in the crossfire of a dissolution contest and ended up having to defend itself against allegations of improper partisanship.

Court Discounts Fair Value Award for Built-In Gains Tax in Shareholder Oppression Case

Posted in Accountants/Experts, Buyout, Fair Market Value vs. Fair Value, Valuation, Valuation Discounts

Justice Ira Warshawsky of Nassau County Supreme Court’s Commercial Division has issued a “BIG” decision (as in discount for Built-In Gains tax) in a stock valuation arising out of a dissolution proceeding brought by minority shareholders claiming oppression. Read about it in this week’s New York Business Divorce.