Insurance-funded buy-sell agreements among owners of closely held companies, when done right, provide financial security for the family of a deceased owner and continuity for the surviving owners. When done wrong, well, that’s another story, as illustrated in a case recently decided by Justice Timothy Driscoll highlighted in this week’s New York Business Divorce.
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Court Dismisses Fiduciary Breach, Contribution Claims Against Non-Managing LLC Member
In a two-member, 50/50 LLC, can Member #1 as sole managing member assert a fiduciary breach claim against non-managing Member #2? Justice Vito DeStefano recently tackled the question in Kalikow v. Shalik, highlighted in this week’s New York Business Divorce.
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Father’s Dead-Hand Control of LLCs Frustrates Sons’ Takeover of Realty Empire
You won’t want to miss the discussion of Justice Charles Ramos’ recent decision in Serota v. Scimone in this week’s New York Business Divorce involving a family feud triggered by a management agreement given by the late founder of a real estate empire organized as a series of LLCs, that left his two sons with ownership and the title of managing member but with no authority to control or sell the business.
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Legal Battle Over Board Seats Splits Neighbors in Manhattan Co-op
Tenant-shareholders in co-op apartments occasionally fall into the same kinds of internal disputes over corporate governance experienced by shareholders in any other kind of closely held corporation. This week’s New York Business Divorce highlights a recently decided battle for board seats among co-owners of a small Manhattan co-op, in which the outcome turned on the court’s construction of arguably out-of-sync provisions in the by-laws and shareholders’ agreement.
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Novel Ruling on Advancement in LLC Dissolution Case “Levels the Playing Field”
Justice Stephen Bucaria’s recent decision in PFT Technology LLC v. Wieser is one of only a handful of rulings by New York courts addressing the right to advancement of legal fees in litigation among members of a limited liability company. Learn more in this week’s New York Business Divorce.
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Court Enforces “Quick Draw” Buy-Sell Agreement in Suit Between 50/50 Shareholders
Buy-sell agreements are commonly used to break fundamental deadlock in companies owned by 50/50 shareholders. This week’s New York Business Divorce examines a recent decision by Justice David Schmidt in Mintz v. Pazer in which he enforced an unusual buy-sell agreement that prompted a lawsuit over which side had the right to buy out the other.
Continue Reading Court Enforces “Quick Draw” Buy-Sell Agreement in Suit Between 50/50 Shareholders
Is Denial of Shareholder Status Shareholder Oppression?
A recent decision by Justice Marcy Friedman draws attention to a somewhat rare breed of minority shareholder oppression involving the controlling shareholder’s repudiation of the petitioner’s stock ownership. It’s a case you won’t want to miss, in this week’s New York Business Divorce.
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Stock Redemption Agreement Forecloses Seller’s Suit for Tax Liability on Phantom Income
Pass-through tax entities including S corporations and LLCs can create personal tax liability on so-called phantom income, that is, undistributed net income allocated on Form K-1. A case recently decided by a Manhattan appeals court tells the tale of a selling shareholder’s costly failure to deal with the issue of phantom income in a stock buy-out agreement. This week’s New York Business Divorce has the story.
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Appellate Court Rejects LLC Manager’s Safe-Harbor Defense, Finds Breach of Fiduciary Duty
Last week’s decision by the Appellate Division, First Department, in Pokoik v. Pokoik appears to be the first appellate ruling applying the safe-harbor provision in Section 409 of New York’s LLC Law governing duties of managers. Learn more about this important development in this week’s New York Business Divorce.
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Court Limits Scope of Release, Denies Advancement of Defense Costs in Sibling “Food Fight”
A noteworthy decision last week by Justice Carolyn Demarest is featured in this week’s New York Business Divorce. The case, involving a fight between sibling co-owners of a food distributor and a separate realty company, addresses important issues concerning the scope of a general release and LLC members’ right to advancement of legal defense costs.
Continue Reading Court Limits Scope of Release, Denies Advancement of Defense Costs in Sibling “Food Fight”