This week’s New York Business Divorce examines a noteworthy decision by Manhattan Commercial Division Justice Barry Ostrager in which he held that a member of a member-managed LLC owes fiduciary duties regardless whether the member actively participates in the LLC’s management.
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Inspection Rights, Oral Operating Agreements, and Other Pop-Diva Delights
Over the last several years, the books-and-records proceeding and its corresponding shareholder rights of inspection seem to have entered a bit of renaissance period in the courts. We here at New York Business Divorce have reported on at least nine decisions primarily addressing the topic since September 2014, going on record to proclaim the phenomenon as a “boost” for the summary proceeding, by which minority owners in closely-held businesses can get a window into the management and operation of the companies from which they’ve been shut out. We’ve even gone so far as to suggest that books-and-records proceedings may be “on a roll” of late, both in terms of an expansion what constitutes a “proper purpose” for bringing the proceeding, as well as in terms of the scope of information attainable.
That trend, at least with respect to the frequency with which issues related to inspection rights are being litigated, appears to be continuing into 2018. What follows are summaries of three of this year’s more notable decisions addressing inspection rights – all from Manhattan Supreme Court, as it happens.
But first, a quick refresher on the subject matter at hand…
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Does This Decision Put the Brakes on Non-Unanimous Amendments to Operating Agreements?
It’s back! For the third week in a row, New York Business Divorce examines a decision by Manhattan Commercial Division Justice Saliann Scarpulla in a multi-faceted feud among members of the Yu family, this time requiring the court to balance the fiduciary duty owed by LLC managers against the right to amend the operating agreement without the consent of the affected minority member.
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Stock Pledge Agreement Defeats Minority Shareholder’s Standing to Sue for Statutory But Not Common-Law Dissolution
In a follow-up to last week’s New York Business Divorce, this week’s post addresses a second decision by Justice Saliann Scarpulla in the Yu family constellation of ilitigations, this time considering the fatal effects on standing to sue for statutory dissolution by assigning one’s stock voting rights.
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Judicial Dissolution and the Weaponized LLC
This weeks New York Business Divorce examines a recent decision by Justice Saliann Scarpulla, dismissing a complaint seeking judicial dissolution of two family-owned LLCs in which the plaintiff alleged that his siblings’ actions were in furtherance of a “personal vendetta.”
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Repeat After Me: You May Not Expel a Member of a New York LLC Unless the Operating Agreement Says So
If you’re an LLC member or member’s lawyer thinking about expelling a misbehaving co-member, but without authorization to do so in the operating agreement, read this post and think again.
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Past is Prologue: Refusal to Adopt Dividend Policy After Petitioner Resigns Not Ground for Dissolution
Merit-based bonuses protected by the business judgment rule, or de facto dividends? That was the central question on which depended the outcome of a common-law dissolution claim in a case decided last month by a New York appellate panel involving a family-owned business. Learn more in this week’s New York Business Divorce.
Continue Reading Past is Prologue: Refusal to Adopt Dividend Policy After Petitioner Resigns Not Ground for Dissolution
Basics of Valuation Proceedings – Litigating an Appraisal from Start to Finish – Part 3
Read about the accounting principles, methodologies, and standards that apply in business valuation proceedings in this week’s New York Business Divorce – the final installment of a three-part series.
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Gymnastics Business Falls Off the Beam in LLC Dissolution Case
A rare post-trial decision granting a minority member’s petition for judicial dissolution of an LLC with no operating agreement takes the spotlight in this week’s New York Business Divorce.
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LLC Dissolution Statutes Under the Microscope: Podcast Interview with Professor Douglas Moll
This week’s New York Business Divorce highlights and links to a Business Divorce Roundtable podcast interview with Professor Douglas Moll, one of the country’s leading authorities on closely held business entities, in which he discusses the findings from his nationwide survey of LLC judicial dissolution statutes.
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