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.
Continue Reading Legal Battle Over Board Seats Splits Neighbors in Manhattan Co-op

Kensington Publishing Corp., known for its bodice-ripper romance novels, is the subject of a somewhat drier but — for business divorce practitioners — no less intriguing court decision earlier this month by Justice Eileen Bransten in a control dispute between family members over a voting agreement. Catch it in this week’s New York Business Divorce.
Continue Reading Voting Agreement Triggers Fight for Control of Family-Owned Publishing House

Shareholder and LLC agreements, like other contracts, frequently contain terms accompanied by the proviso, “notwithstanding anything to the contrary in this Agreement,” signaling that the term trumps all others. Read this week’s New York Business Divorce to learn about a recent First Department appellate ruling in Schepisi v. Roberts highlighting the mischief that can result from multiple, ” dueling” notwithstanding clauses.
Continue Reading LLC Agreement Falters from Dueling “Notwithstanding” Clauses

A realty corporation seeks to sell its sole asset and buy a replacement property as part of a tax-deferred 1031 exchange. Is the sale in furtherance of the corporation’s business purpose, or is it a liquidation requiring shareholder approval and potentially triggering appraisal rights? That was the issue posed in a recent ruling by Justice Melvin Schweitzer in Theatre District Realty Corp. v. Appleby, feaured in this week’s New York Business Divorce.
Continue Reading With Sir Blackstone’s Help, Court Thwarts Minority Shareholder’s Effort to Block 1031 Exchange

It happens once in a while: the co-owners of a business entity formed under the laws of State X have a choice of law clause in their agreement opting to be governed by the laws of State Y. Such was the case in Gelman v. Gelman, recently decided by Justice Daniel Palmieri involving a dispute between sibling co-members of a Delaware LLC whose operating agreement had a New York choice of law provision. Which state’s law did the court apply? Get the answer in this week’s New York Business Divorce.
Continue Reading What Law Applies When Internal Affairs Doctrine Clashes With Choice-of-Law Clause?

A recent decision by Westchester Commercial Division Justice Alan D. Scheinkman in Briarcliff Solutions Holdings, LLC v. Fifth Third Bank (Chicago) takes the spotlight in this week’s New York Business Divorce, featuring a battle for control of the company’s Board of Directors and, ultimately, control of a lawsuit asserting claims against one ownership faction. Don’t miss it.
Continue Reading Whose Lawsuit Is It Anyway?

Someday, if and when the facts come out in discovery, we’ll learn what really happened in the curious case of Matter of Hu (Lowbet Realty Corp.), 2012 NY Slip Op 22314 (Sup Ct Kings County Nov. 2, 2012), in which a slippery minority shareholder somehow managed to sell the corporation’s sole realty asset and abscond with $1.6 million sale proceeds in violation of court order in a pending liquidation proceeding brought by the majority shareholder. In the meantime, the buyer and the property manager now find themselves ensnared in the majority shareholder’s effort to rescind the sale and to recover damages.

The court’s decision in Lowbet, issued earlier this month by Brooklyn Commercial Division Justice Carolyn E. Demarest, tells a remarkable story of brazen disobedience of court order by one Margaret Liu, a 25% shareholder of Lowbet Realty Corp. The decision also sheds light on an interesting, rarely seen procedural question in corporate dissolution proceedings, namely, whether the court may adjudicate within such summary proceedings a shareholder’s claim for relief against a third party who is neither a shareholder nor officer/director of the corporation, rather than being forced to commence a separate, plenary action by ordinary summons and complaint.


The petitioner, Shau Chung Hu, was the 100% owner of Lowbet when, in 1980, it purchased a 19-unit apartment building in Brooklyn. In 1985, Hu married Margaret Liu and gave her a 25% stock interest in Lowbet. Mr. Hu and Ms. Liu separated in 1995, at which time Mr. Hu went to China where he has resided ever since, leaving Ms. Liu in full control over Lowbet.
Continue Reading Dissolution Case Ensnares Buyer of Corporation’s Realty in Unauthorized Sale

This week’s New York Business Divorce features an interesting decision by Commercial Division Justice Emily Pines in Nastasi v. Carlino, where she sent both sides home empty handed in a bitter shareholder dispute with misconduct on both sides.

Continue Reading Court Sends Everyone Home Empty Handed in Bitter Business Breakup

A Queens County judge recently lowered the boom on controlling shareholders of a fire and burglar alarm company, all of whose assets they sold without telling, or distributing any sale proceeds to, a minority shareholder. Get the full story in this week’s New York Business Divorce.

Continue Reading Court Grants Common-Law Dissolution and Awards Damages for 5% Shareholder Excluded From Sale of Company Assets