March 2010

It’s hard to imagine a more challenging fact pattern and set of legal issues for a law school exam than the one presented in real life in the recently decided case, Pappas v. Tzolis, involving a buyout among LLC members followed by the purchasing member’s sale of the LLC’s asset to an outside buyer for a price far in excess of the buyout, followed by a lawsuit by the former members claiming they were bamboozled by the buying member. Read all about it in this week’s New York Business Divorce.
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Continue Reading Does Operating Agreement’s Clause Permitting Competitive Activities Eliminate Member’s Fiduciary Duty to Disclose Negotiations to Sell LLC’s Assets Before Buying Out Co-Members?

This week’s New York Business Divorce examines a recent Appellate Division, Second Department decision in Matter of Dream Weaver Realty, Inc., where the court affirmed dissolution of a realty company owned equally by two feuding shareholders, over the objection that a liquidation sale of the realty would result in less proceeds than a non-forced, private sale outside of dissolution.
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Continue Reading Impasse Over Winding Up of Realty Company Leads to Judicial Dissolution

Can a court order the expulsion of an LLC member for misconduct absent language in the operating agreement so providing? Get the answer in this week’s New York Business Divorce highlighting a recent decision by the Appellate Division, Second Department, posing the issue in the context of a bitter dispute between two brothers.
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Continue Reading Tzolis No Solace for Proponent of LLC Member Expulsion

The Appellate Division, First Department, has ruled consistent with Delaware law that an LLC manager’s right to indemnification of legal expenses in winning dismissal of one action need not await resolution of a second action raising the same claims. This week’s New York Business Divorce explains.
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Continue Reading Following Delaware Precedent, New York Appeals Court Rules that Indemnification of LLC Managers for Successful Defense in First Action Need Not Await Resolution of Second, Related Litigation

Estate planners frequently utilize limited liability companies to separate management and economic interests. This week’s New York Business Divorce examines a fascinating decision last month by the Delaware Chancery Court dismissing a dissolution petition brought by the trustees of an inter vivos trust that held almost all of the LLC’s economic interest but none of the voting rights or management control.
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Continue Reading “Unusual Actions Breed Unusual Outcomes”: Delaware Court Dismisses Non-Voting Trust’s Action to Dissolve LLC Born of Estate Plan