Access to Books and Records

This week’s New York Business Divorce offers its annual Winter Case Notes with synopses of half a dozen recent decisions in business divorce cases involving minority shareholder oppression, books and records proceedings, and more.
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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…
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It’s brother against brother in the case featured in this week’s New York Business Divorce, in which the court dismissed a petition to dissolve a real estate holding company based on alleged withholding of company information.
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This week’s New York Business Divorce offers its annual Winter Case Notes with synopses of five recent decisions in business divorce cases involving LLC dissolution, cash-out merger, LLC member expulsion, and more.
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Is a “Management Member” of an LLC, who holds only an economic interest, a “Member” for purposes of demanding access to the LLC’s books and records? Justice Shirley Werner Kornreich, applying Delaware law, closely examined the operating agreement in upholding inspection rights, as explained in this week’s New York Business Divorce.
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