2010

The venerable, closely-held business corporation may be on its last legs. Looking at some recently published statistics on new entity filings, it’s clear that the young upstart, the limited liability company, has already far surpassed its elder. So why does New York lag behind the rest of the country in the LLC revolution? It’s in this week’s New York Business Divorce.
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Continue Reading Statistics Show New York Lagging in the LLC Revolution

An appellate decision this month, in Matter of Eklund Farm Machinery, Inc., spotlights anew the inadequate statutory compensation scheme governing court-appointed receivers in corporate dissolution proceedings. It’s in this week’s New York Business Divorce.
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Continue Reading Statute Constrains Commissions for Court-Appointed Receivers in Corporate Dissolution Proceedings

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.
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Continue Reading Court Denies Arbitration of Corporate Dissolution Petition Notwithstanding Broad Clause

Stock valuation junkies can get their fix in this week’s New York Business Divorce, as it revisits the issue of discounts for BIG — as in built-in capital gains taxes — in the appraisal of C corporation shares under the fair value standard, prompted by a decision last week by a Manhattan appeals court in a case called Matter of Mandelbaum.
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Continue Reading Dissenting Shareholder Stock Appraisal Triggered by Freeze-Out Merger Raises Issue of Post-Merger Tax Consequences for C Corporation with Built-In Gains

Kun v. Fulop, decided last month by the Appellate Division, Second Department, is one of those cases that inspires the saying, If you want to ruin a good friendship, go into business together. Get the story in this week’s New York Business Divorce.
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Continue Reading Disputes Over Shareholder Status in Close Corporations Continue to Vex Courts

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

The hydra-headed Ficus Investments litigation is the gift that keeps on giving, at least to students of business divorce. This week’s New York Business Divorce highlights the latest appellate decision in the case, in which the court reversed an order dissolving the limited liability company that managed the mortgage business at the center of the melee.
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Continue Reading Dispute Over Authenticity of Operating Agreement Leads to Reversal of Order Summarily Granting LLC Dissolution

Last week the Appellate Division, Second Department, affirmed a lower court’s order directing an “equitable” buyout of an LLC member who petitioned for dissolution, notwithstanding the omission of a buyout remedy in the LLC Law. Read about this important ruling in this week’s New York Business Divorce.
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Continue Reading Appeals Court Upholds Equitable Buyout Remedy in LLC Dissolution

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?