This week’s post is by Matthew D. Donovan, a commercial litigation partner and member of Farrell Fritz’s business divorce practice group. 


There is a bit of folk wisdom that’s been passed down through my family over the generations that speaks to the rite of passage when one is confronted with the reality that there is more to life than oneself. The familial adage, as usually (and colorfully) pronounced by a superior elder, went something like: “The sun doesn’t rise and set over your own Irish arse!”

I must confess that I’ve often considered this as a kind of vernacular anchor to understanding the concept of fiduciary responsibility in the closely-held business context where officers, directors, and controlling shareholders are obligated under the law to put the interests of their company and business partners before their own. A recent post-trial decision out of Delaware’s Court of Chancery, Personal Touch Holding Corp. v Glaubach, brings home this lesson with similar colloquial color.

Not infrequent is the occasion on which we here at New York Business Divorce report on developments in Delaware law. As we have noted, Delaware has long been the preferred state of incorporation for both public and private companies, and its Court of Chancery is considered by many to be the preeminent business court in the land. Small wonder, then, that the Personal Touch decision serves as a kind of archetypal example of how not to behave in the corporate fiduciary context. Continue Reading Throwing Grenades and Casting Plagues Upon Your Fellow Directors: A Lesson in Fiduciary (Ir)responsibility

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… Continue Reading Inspection Rights, Oral Operating Agreements, and Other Pop-Diva Delights