Sometimes, we encounter business owners who just can’t seem to differentiate themselves from the businesses they own. In this week’s New York Business Divorce, the owner of an automobile dealership group had the book thrown at him with a massive punitive damages award after helping himself to the business’s working capital.
Continue Reading “Knowing” and “Intentional” Defalcation Yields Goliath Punitive Damages Award
Corporate management takes the win in this week’s New York Business Divorce with what appears to be the first New York appellate decision to apply the business judgment rule to a decision by a board of directors to oust one of its own under the “cause” standard for removal found in Section 706 of the Business Corporation Law. Whether there is, or is not, “cause” to fire a co-director, held the Court, is a matter falling comfortably within the board’s business judgment, even as a response to aggressive activism. So behave on that board. Otherwise, your colleagues may show you the door.
Continue Reading Co-Director Removal and the Business Judgment Rule
Some business divorce cases are about money. Others are about control. Today’s case, Homapour v 3M Properties LLC, 2026 NY Slip Op 04371 (1st Dept 2026), is about both.
As we often see with second and third generation closely-held family businesses, the informal trust and family hierarchy that may have helped build the enterprise
Litigation over who is—and who is not—a member of a limited liability company has become a defining feature of LLCs. A recent First Department decision suggests a shift away from informality and back toward strict compliance with the contractual mechanics of admission.
Continue Reading Promise of Equity Falls to Operating Agreement’s Rigid Admission Requirements
Strict compliance with contractual conditions precedent, yea or nay? In New York, it depends.
Now, the general rule is that strict compliance with contractual conditions precedent is required. The New York Court of Appeals has previously held: “Express conditions must be literally performed, substantial performance will not suffice” (MHR Capital Partners LP v Presstek,
This week on New York Business Divorce, read about the interplay between statutory and contract rules for LLC manager removal or expulsion, set within an appeal from a trio of decisions we wrote about what feels like a lifetime ago.
Think bad faith can save you from expulsion? A new ruling shows just how slim that lifeline really is.
Continue Reading The Bad Faith Defense to Opportunistic Expulsion
Did a 25% shareholder forfeit her equity in an entertainment industry management company when she announced her intention to retire? Learn the answer in this week’s New York Business Divorce.
Continue Reading Retirement of Working Owners of Closely Held Business Entities: What’s Your Plan?
This week’s New York Business Divorce features a failed attempt at removing restaurant manager on a preliminary injunction motion.
This week’s New York Business Divorce presents the 2025 Winter Case Notes, where we highlight a few recent decisions of interest featuring strict adherence to statutory language and the parties’ governing agreements.
Continue Reading Winter Case Notes: Nice Try, But the Agreements Say What They Say