Compulsory Buyout

Subscribe to Compulsory Buyout via RSS

This week in New York Business Divorce, read about yet another attempted bequest in a last will and testament of a valuable business interest foiled by a buy-sell provision in the entity’s contract. We’ll summarize some of the rules of law courts use to resolve the conflict.
Continue Reading A Gift Horse with Rotten Teeth: When Equity Bequests Violate Transfer Restrictions or Buy-Sell Agreements

This week’s New York Business Divorce touches on familiar themes. A bitter father-son dispute. A disagreement over whether to sell or keep the business. An expulsion and compelled buyout. Throw in a fistfight, criminal charges, and an alleged extortion in exchange for reduced criminal charges, and you’ve got one heck of a sordid story. There’s even a legal lesson about the importance of strict compliance with closing deadlines in buy-sell option agreements.
Continue Reading Dollars, Donuts, and Buy-Sell Options

OIG1

“Under any standard of value, the true economic value of a business enterprise will equal the company’s accounting book value only by coincidence . . .” says the late business valuation expert and author Shannon Pratt.  So why do so many shareholder buy-sell agreements require that the shares be purchased for book value? This week’s post explores.
Continue Reading And the Award for Most Creative Attempt to Evade a Book Value Buy-Sell Provision Goes To . . .

In this week’s New York Business Divorce, read about several strands of case law employing different language to express the same concept: a closely-held business interest transfer restriction or buy-sell agreement that would impose a “forfeiture,” cause the interest to become “void,” result in “annihilation of property,” or “bestow a windfall” upon a co-owner, is unenforceable as against public policy.
Continue Reading Stock Transfer Restrictions and “Annihilation of Property”

In a case featuring your authors as counsel for the prevailing parties, NY County Commercial Division Justice Robert Reed enforces the buy-sell provision of a corporation’s shareholders agreement triggered by the shareholders’ petition for dissolution. …
Continue Reading Look Before You Leap: Buy-Sell Agreements Triggered by a Petition for Dissolution

This week’s New York Business Divorce examines a recently decided case granting a petition for “equitable dissolution” by means of a forced buy-out of the respondent 50% shareholders of the close corporation that owns the famous Delmonico’s steak house in downtown Manhattan.
Continue Reading On the Menu: Steak and Equitable Dissolution

It’s no match for Jarndyce v. Jarndyce, but 15 years is some sort of record for litigating the breakup of a single-asset real estate partnership during which one of the partners died, triggering the other’s option to purchase under a fixed-price formula. Read about it in this week’s New York Business Divorce.
Continue Reading A Partnership Dissolution in Three Acts Over Fifteen Years and Counting

Can an LLC member with a put option–the right to sell his interest back to the LLC–exercise that option when doing so will render the LLC insolvent? This week’s New York Business Divorce post highlights a recent decision by Justice Masley of the New York County Commercial Division considering this issue. …
Continue Reading Departing LLC Members: Exercise Your Put Option Before Insolvency Approaches

The sale of a family-owned business triggers a dissolution petition over the contested disposition of the sale proceeds, leading to a noteworthy decision earlier this month by Justice Richard M. Platkin. Get the story in this week’s New York Business Divorce.
Continue Reading Siblings Battle Over Spoils from Sale of Family-Owned Business