Dissolution Defenses

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Delaware law’s contractarian approach is central to that state’s jurisprudence concerning limited liability companies. Last month, in Huatuco v. Satellite Healthcare, the Court of Chancery cited freedom-of-contract in dismissing an action for judicial dissolution based on its finding that the LLC agreement’s provision, limiting member rights to those expressly granted in the agreement, constituted a waiver of the right to seek judicial dissolution. This week’s New York Business Divorce asks the question, does Huatuco take contractarianism too far?
Continue Reading Contractarianism Gone Wild?

Does the petitioner’s bad faith matter in a deadlock dissolution case when the relationship between the 50/50 owners has broken down irreconcilably? Justice Vito DeStefano recently tackled the question in Feinberg v. Silverberg in an important ruling that is likely to be cited in other cases. Read more in this week’s New York Business Divorce.
Continue Reading Is Bad Faith a Defense in Deadlock Dissolution Proceedings?

This week’s New York Business Divorce offers some “summer shorts” consisting of summaries of three recent decisions of interest by Justices Orin Kitzes, Stephen Bucaria and Ellen Coin featuring involving exclusion of a minority LLC member seeking dissolution, a request for injunctive relief pending the trial of a corporate dissolution case, and a cmplaint seeking profit share following the revocation of an LLC membership purchase agreement.
Continue Reading Summer Shorts: The Excluded LLC Member and Other Decisions of Interest

“Is she or isn’t she a shareholder? Only her tax preparer knows for sure.” It may not be quite as catchy as the famous Clairol commercial, but it’s a good entreaty to read this week’s New York Business Divorce highlighting a recent appellate ruling in a dissolution case in which the petitioner unsuccessfully relied on tax returns to prove his shareholder status.
Continue Reading Form K-1s Do Not Always a Shareholder Make

This week’s New York Business Divorce features brief summaries of a handful of noteworthy court decisions that escaped my attention last year, including a pair of decisions involving deadlock and oppressed minority shareholder disputes, and another pair of decisions involving receivership applications.
Continue Reading Some Winter Case Notes

The doctrine of “unclean hands” played a decisive role in a recent decision by Justice Emily Pines in Kimelstein v. Kimelstein, in which the court dismissed a dissolution petition brought by someone who admitted that he never formalized his stock interest to keep it hidden from his ex-wives and the government. It’s in this week’s New York Business Divorce.
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Continue Reading Unclean Hands Defense Defeats Petitioner’s Shareholder Status in Corporate Dissolution Suit

When it comes to documenting ownership of closely held corporations, as Art Linkletter would have said, shareholders do the darndest things. There’s no better illustration of this than Matter of Sunburst Associates, Inc. decided last week by the Appellate Division, Third Department, in a judicial dissolution proceeding brought by a putative 50% shareholder. This week’s New York Business Divorce has the story.
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Continue Reading Inconsistent Documents and Conflicting Testimony Cloud Stock Ownership Issue in Corporate Dissolution Case

Dissension between members of a family-owned business can present especially difficult issues when litigation erupts. This week’s New York Business Divorce highlights recent decisions by Justices Timothy Driscoll (Nassau County), Emily Pines (Suffolk County) and Deborah Kaplan (Manhattan) involving dissolution and related claims among warring family members.
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Continue Reading A Toxic Mix of Family and Business

Those interested in the evolving law of LLC dissolution won’t want to miss this week’s New York Business Divorce featuring a case called Mizrahi v. Cohen decided last week by Justice Carolyn Demarest in which she ordered dissolution of a financially failing real estate holding company.
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Continue Reading Court Orders Dissolution of Unprofitable Real Estate LLC

Matter of Bernfeld, decided last week by a Brooklyn appellate panel in a signed opinion authored by Justice John Leventhal, offers a rare and fascinating encounter with an ultimately unsuccessful attempt to obtain judicial dissolution of a professional corporation under Section 1103 of the Business Corporation Law, brought by the widow of the deceased majority shareholder. If you are, or have a client who is, a co-owner of a professional corporation, do yourself a favor and read this week’s New York Business Divorce.
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Continue Reading Case Illustrates How Not to Plan for the Death of a Shareholder in a Professional Corporation