July 2026

Corporate management takes the win in this week’s New York Business Divorce with what appears to be the first New York appellate decision to apply the business judgment rule to a decision by a board of directors to oust one of its own under the “cause” standard for removal found in Section 706 of the Business Corporation Law. Whether there is, or is not, “cause” to fire a co-director, held the Court, is a matter falling comfortably within the board’s business judgment, even as a response to aggressive activism. So behave on that board. Otherwise, your colleagues may show you the door.…

Continue Reading Co-Director Removal and the Business Judgment Rule

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Some business divorce cases are about money. Others are about control. Today’s case, Homapour v 3M Properties LLC, 2026 NY Slip Op 04371 (1st Dept 2026), is about both.

As we often see with second and third generation closely-held family businesses, the informal trust and family hierarchy that may have helped build the enterprise…

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Consider the case of the LLC member who failed to meet a capital call and consequently was forced to sell its minority LLC interest valued by the managing member at $1.7 million, to the managing member in exchange for a non-recourse promissory note with no maturity date and no payments unless the former interest generates after-tax distributions, of which there were none to date. Found out how the courts ruled in this week’s NYBD post. …

Continue Reading Wait a Minute! Just Because I Failed to Meet a Lousy Capital Call, You Took My Membership Interest That You Valued at $1.7 Million and Paid Me Nothing?