2011

Tax analysis is a critical part of the business divorce attorney’s job when it comes to fashioning a shareholder buy-out agreement that, among other things, protects the selling shareholder from personal income tax liability on non-distributed or “phantom” net income that later may show up on the shareholder’s Schedule K-1. This week’s New York Business Divorce looks at a recent decision by Manhattan Supreme Court Justice Judith Gische in a fight over the tax consequences of a buy-out settlement of a corporate dissolution.
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Continue Reading Beware Taxes on Phantom Income When Entering Into Shareholder Buy-Out Agreement

This week’s New York Business Divorce offers some “summer shorts” consisting of summaries of three recent decisions of interest including two by Justice Carolyn E. Demarest and a split decision by the Appellate Division, First Department.
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Continue Reading Summer Shorts: Stock Sale Under Duress and Other Recent Decisions of Interest

Why is New York near the bottom of the pack in the U.S. when it comes to the popularity of the limited liability company as the choice of entity for new businesses? A new statistical study concludes that New York’s formation fees, and particularly its expensive requirement for newspaper publication of LLC formations, is the reason. Read more in this week’s New York Business Divorce.
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Continue Reading 625 Reasons Why New York Lags in LLC Formations

It’s one thing to claim that someone never became a member of an LLC, it’s another to claim that an admitted LLC member later withdrew. Justice Stephen Bucaria addresses the latter claim in his recent decision in Gitlin v. Chirinkin, featured in this week’s New York Business Divorce.
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Continue Reading Member of Real Estate LLC Never Withdrew, Held Entitled to Share of Sale Proceeds

The discount for lack of marketability is a fixture in New York fair value jurisprudence as a result of almost 30 years of case law starting with Matter of Blake. Some prominent voices in the business valuation field are challenging the doctrine as wrong in theory and bereft of empirical support. Learn more in this week’s New York Business Divorce.
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Continue Reading The Marketability Discount in Fair Value Proceedings: An Emperor Without Clothes?

The statute governing LLC dissolution proceedings, unlike the one for corporations, does not require publication notice at the start of the case. So why do we still see LLC dissolution show cause orders requiring expensive publication? This week’s New York Business Divorce takes a look.
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Continue Reading There’s No Need for Publication Notice of LLC Judicial Dissolution Proceedings

Matter of Bernfeld, decided last week by a Brooklyn appellate panel in a signed opinion authored by Justice John Leventhal, offers a rare and fascinating encounter with an ultimately unsuccessful attempt to obtain judicial dissolution of a professional corporation under Section 1103 of the Business Corporation Law, brought by the widow of the deceased majority shareholder. If you are, or have a client who is, a co-owner of a professional corporation, do yourself a favor and read this week’s New York Business Divorce.
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Continue Reading Case Illustrates How Not to Plan for the Death of a Shareholder in a Professional Corporation

Last week’s rulings by New York’s high court in the closely-watched Centro and Arfa cases resolves much of the uncertainty that has surrounded the ability of controlling owners of closely held companies to bargain for effective releases against fiduciary-based claims of non-disclosure when buying out minority owners. Get the full story in this week’s New York Business Divorce.
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Continue Reading New York’s Top Court Resets the Bargaining Table When Controlling Owner of Closely Held Company Buys Out Minority Partner

A recent decision by Nassau County Commercial Division Justice Ira Warshawsky in Bombard v. Xitenel, Inc. takes a fresh look at the contract-based rules surrounding a disputed claim of stock ownership in a company operating a genetics-testing laboratory. It’s in this week’s New York Business Divorce.
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Continue Reading Failure to “Seal the Deal” Dooms Suit to Enforce Minority Stock Ownership Claim