Buyout

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An interesting new decision by Queens County Justice Peter Kelly in a stock valuation proceeding wrestles with issue preclusion stemming from a bankruptcy court’s rejection of a proposed settlement involving the petitioner’s shares. This week’s New York Business Divorce explains.
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Continue Reading Bankruptcy Court’s Ruling Does Not Establish “Floor” Value in Subsequent Stock Appraisal Proceeding

Shareholder and operating agreements typically contain provisions restricting the right to transfer stock or membership interests. A recent decision by Justice Ira Warshawsky in Verderber v. Commander Enterprises Centereach, LLC, in which he refused to grant a preliminary injunction enforcing a transfer restriction, prompts this week’s New York Business Divorce to examine the ancient rule against unreasonable restraints on alienation.
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Continue Reading Beware Unreasonable Restraints on Alienation When Drafting Shareholder and Operating Agreements

A rare case stemming from a petition to dissolve a residential co-op corporation is the subject of this week’s New York Business Divorce. The decision by Justice Carolyn Demarest in McDaniel v. 162 Columbia Heights addresses challenging valuation issues for this unique type of business corporation.
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Continue Reading Valuing Shares in a Residential Co-op Corporation: Is the Whole Worth More Than the Sum of its Parts?

The death in 2007 of Claudia Cohen, a well-known gossip columnist and socialite who married and divorced billionaire Ronald Perelman, led to a high-stakes litigation between her estate and her surviving brother over the valuation of the estate’s 50% share in a family partnership that directly or indirectly owned real estate interests with a market value over $20 million. A recent court decision ruled against the estate’s $11.5 million claim and, instead, enforced a $178,000 “net book value” buyout under the partnership agreement’s formula, also rejecting the estate’s argument that such a drastically below-market buyout was unconscionable. Read this week’s New York Business Divorce to get the full story.
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Continue Reading Court Rejects Unconscionability Argument in Family Partnership Valuation Case, Concludes that “Full and True Value” Equals “Net Book Value” as Defined by Agreement

Including buy-sell provisions in a shareholders’ or operating agreement is a good idea, but if the agreement fails to clearly define basic valuation parameters it may lead to the very litigation that the agreement was intended to avoid. Case in point: Justice Ira Warshawsky’s recent decision in Sassower v. 975 Stewart Avenue Associates, LLC, featured in this week’s New York Business Divorce.
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Continue Reading Case Illustrates Importance of Clear Valuation Parameters in Buy-Sell Agreement Among Owners of Closely Held Business

Two feuding 50-50 shareholders enter a buy-sell option agreement in which either one can offer his shares to the other at a fixed price and, if the offer is declined, the corporation is voluntarily dissolved. One of them later offers his shares. The other declines. Sounds like simple plan to avoid a messy court battle, right? Not quite, as you’ll find out in this week’s New York Business Divorce discussing a recent decision by Justice Ira Warshawsky.
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Continue Reading Court Grants Dissolution, Rejects Claim that Failed Buy-Sell Agreement Was “Ploy” by Petitioner to Take Over Corporation’s Retail Store Lease for His New Business

Did you know that the Surrogate’s Court has jurisdiction over corporate dissolution proceedings involving the estate of a deceased shareholder? Read more in this week’s New York Business Divorce highlighting a recent appellate decision affirming an award in favor of the estate of a minority shareholder arising from a petition for judicial dissolution of an accounting firm.
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Continue Reading Majority Shareholders of Accounting Firm Held Liable for Value of Deceased Minority Shareholder’s Interest After They Formed New Firm Using Old Firm’s Assets and Good Will

Stock valuation junkies, this week’s New York Business Divorce is for you, as we examine a recent Fourth Department decision that weighs in on the controversial issue whether the discount for lack of marketability applies only to the company’s good will or to the entire enterprise value.
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Continue Reading Appellate Ruling in Stock Valuation Case Further Muddies the Marketability Discount Waters

Corporate bylaw provisions governing the number of directors and procedures for their appointment can sometimes play a critical role in the outcome of disputes among shareholders of closely held corporations, as illustrated in a recent case highlighted in this week’s New York Business Divorce involving a small residential co-op.
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Continue Reading Pay Attention to the Latent Power of Corporate Bylaws

Valuation discounts are among the most hotly contested issues in minority shareholder buy-out proceedings triggered by dissolution petitions. As between the discount for lack of marketability and the minority discount (a/k/a discount for lack of control), New York case law allows one of them and prohibits the other. Do you know which is which? Find out in this week’s New York Business Divorce.
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Continue Reading What’s the Difference Between Marketability and Minority Discounts?