Can the federal statute that brought down John Gotti also play a role in business divorce litigation? This week’s New York Business Divorce looks at the sparse and largely if not entirely unsuccessful role the Racketeer Influenced and Corrupt Organization Act a/k/a RICO has played in litigation between co-owners of closely held firms.
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2021
The Oral Partnership Operating as a Corporation: Is it a Partnership? A Corporation? Can it be Both?
By Franklin C. McRoberts on
Posted in Partnerships
In this week’s New York Business Divorce, learn if it’s possible to plead the existence of a viable oral partnership whose business operated in the form of a corporation or limited liability company. The short answer: yes it can be done, but it’s not easy to do.
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“Informal Dissolution” and Individual Liability
By Franklin C. McRoberts on
Posted in Corporate Governance
In this week’s New York Business Divorce, read about the unhappy consequences under the “informal dissolution” doctrine to befall a corporate director who effectuated the liquidation of a defunct corporation’s assets without providing statutory notice of dissolution to the entity’s creditors.
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General Partner Breached Implied Covenants in Partnership Agreement, but Plaintiff’s “Apples-to-Oranges” Calculation Dooms Bid for Damages
By Peter J. Sluka on
If man’s first sin was eating the apple, a business valuator’s greatest sin is mixing apples and oranges. In Dieckman v. Regency GP, LP, Chancellor Bouchard denied the Plaintiff’s bid for $1.6 billion in damages, even after finding that the defendant general partner breached the partnership agreement’s implied duty of good faith and fair dealing. The decision rests on Chancellor Bouchard’s complete rejection of Plaintiff’s damages calculation on the grounds that it was akin to “comparing apples to oranges.”…
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Winter Case Notes: Dissolution of Not-For-Profit Corporation and Other Decisions of Interest
This week’s New York Business Divorce offers its annual Winter Case Notes with synopses of four noteworthy decisions by courts in New York and Iowa.
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Who Decides Disputed Valuation Under LLC Agreement’s Buy-Out Provision: Arbitrator or Appraiser?
By Peter A. Mahler on
Posted in Arbitration and Mediation, Buyout
Buy-out litigations don’t get much more interesting than the ongoing battle in the Yakuel v Gluck case making its second appearance on this blog. In this phase, the court decides whether an arbitrator could recalculate an appraisal award as damages for breach of the appraisal process where the parties’ agreement called for a “final and binding” valuation by the appraiser.
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A Shotgun Buy-Sell Agreement and an Email Deal Walk into a Beachside Bar . . .
By Peter J. Sluka on
The interaction between an LLC’s operating agreement and a subsequent, informal deal between the members raises difficult questions surrounding the enforceability of either agreement. In a recently-filed Manhattan Commercial Division case, the Court granted the plaintiff a preliminary injunction, signaling to the parties that the plaintiff was likely to succeed on his claim to enforce the informal deal notwithstanding arguably contrary provisions in the operating agreement. The case reminds us that the formality requirements of an LLC operating agreement may give way to an informal agreement when both LLC members manifest their intent to be bound by the informal agreement.
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Re-Revisiting The Duty to Disclose Third-Party Offers Amidst Buy-Out Negotiations
By Peter A. Mahler on
Defying my recent lamentation on the dearth of cases involving buy-out disputes where the buyer doesn’t disclose to the seller an outside offer for the entity’s assets at a much higher value, this week’s New York Business Divorce examines yet another such case with some interesting twists on the usual fact pattern. …
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The Farro Litigation: The Rest of the Story
By Franklin C. McRoberts on
This week’s New York Business Divorce is a follow-up to last week’s article, a piece about the enormously important appellate decision in the Farro case, the first to carefully consider the correct meaning and interpretation of New York’s LLC merger statute and its relation to the analogous corporation merger statute. In this week’s article, learn about the rest of the story in the Farro litigation, addressed in two companion appellate decisions issued the same day.
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Groundbreaking Appellate Ruling Boosts LLC Cash-Out Mergers
By Peter A. Mahler on
Posted in Freeze-Out Merger, LLCs
In a long-awaited decision handed down last week by the Appellate Division, Second Department, the court construed two sections of New York’s LLC Law in a significant boost to the ability of members with voting control to remove minority members by means of a cash-out merger. Learn more in this week’s New York Business Divorce.
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