This week’s New York Business Divorce looks at a recent decision by Justice Herman Cahn addressing the fiduciary duties of a controlling shareholder who authorizes and issues additional shares to himself without offering the same opportunity to minority shareholders.
Continue Reading Controlling Shareholder’s Dilution of Minority Interest Requires Bona Fide Business Purpose
Divided Appeals Court Upholds Removal of LLC Member-Manager Contrary to Voting Agreement
A divided panel of the Appellate Division, First Department last week upheld the removal of an LLC member-manager by majority vote of the members, notwithstanding a provision in the operating agreement requiring all members to vote for the ousted manager in any election. Learn more in this week’s New York Business Divorce.
Continue Reading Divided Appeals Court Upholds Removal of LLC Member-Manager Contrary to Voting Agreement
Courts Differ on Application of Marketability Discount in Stock Valuation Proceedings
New York courts generally will apply a discount for lack of marketability in valuing the shares of closely held corporations in buyout proceedings triggered by judicial dissolution. Whether the discount applies only to goodwill, or to the entire enterprise value, may depend on which court you’re in. Find out more in this week’s New York Business Divorce.
Continue Reading Courts Differ on Application of Marketability Discount in Stock Valuation Proceedings
De Facto Dissolution of LLC Does Not Terminate Members’ Fiduciary Duty or Avoid Accounting for Subsequent Profits
The Appellate Division, Third Department, has ruled that an LLC member’s fiduciary duties continue even after the de facto break-up of the company. Read about this important decision in this week’s New York Business Divorce.
Continue Reading De Facto Dissolution of LLC Does Not Terminate Members’ Fiduciary Duty or Avoid Accounting for Subsequent Profits
Delaware and New York Courts Agree that 50% LLC Member May Not Hire Lawyer to Represent Company Adverse to Other 50% Member
There’s been a spate of recent court decisions concerning the authority of one 50% business owner to hire counsel to represent the company adverse to the other 50% owner. This week’s New York Business Divorce looks at two new decisions, one from New York and one from Delaware.
Continue Reading Delaware and New York Courts Agree that 50% LLC Member May Not Hire Lawyer to Represent Company Adverse to Other 50% Member
Court Discounts Fair Value Award for Built-In Gains Tax in Shareholder Oppression Case
Justice Ira Warshawsky of Nassau County Supreme Court’s Commercial Division has issued a “BIG” decision (as in discount for Built-In Gains tax) in a stock valuation arising out of a dissolution proceeding brought by minority shareholders claiming oppression. Read about it in this week’s New York Business Divorce.
Continue Reading Court Discounts Fair Value Award for Built-In Gains Tax in Shareholder Oppression Case
Court Orders Return of Investment as Equitable Remedy in LLC Dissolution Proceeding
A post-trial decision by Westchester Supreme Court Justice Alan Scheinkman tackles a novel remedial issue in an LLC dissolution involving 50-50 partners who went from friendship to fisticuffs over their vending machine business. Read about it in this week’s New York Business Divorce.
Continue Reading Court Orders Return of Investment as Equitable Remedy in LLC Dissolution Proceeding
Failure to Disclose Stock Interest in Bankruptcy Petition Defeats Standing in Later Dissolution Proceeding
It’s not often that bankruptcy law intersects with corporate dissolution proceedings based on deadlock or minority shareholder oppression, but when it does, likely it’s bad news for the petitioner seeking to liquidate the company or to be bought out by another shareholder. A recent decision by Kings County Supreme Court Justice Carolyn Demarest illustrates why, in this week’s New York Business Divorce.
Continue Reading Failure to Disclose Stock Interest in Bankruptcy Petition Defeats Standing in Later Dissolution Proceeding
Indemnity Provision Can Tilt the Playing Field in Litigation Between Business Partners
This week’s New York Business Divorce looks at a recent case in which the managing member of an LLC, relying on the operating agreement’s indemnity provision, sought to sell company assets for various purposes including payment of her own legal fees to defend against an action brought by the other members to remove her as manager.
Continue Reading Indemnity Provision Can Tilt the Playing Field in Litigation Between Business Partners
Decision Lowers the Bar for Former Partner’s Claims of Fraudulent Buyout
An important appellate decision issued last week, sustaining a complaint alleging concealment of financial projections impacting on share price, demands the attention of business owners and their counsel considering the buyout of a minority partner. Read about it in this week’s New York Business Divorce.
Continue Reading Decision Lowers the Bar for Former Partner’s Claims of Fraudulent Buyout