What happens when you cross an at-will employment agreement with a mandatory redemption requirement at a deeply discounted price? Find out in this week’s post.
Continue Reading At-Will Employment Agreement Plus Mandatory Redemption Clause Leaves Minority Shareholder-Employees Out in the Cold
Combine a business divorce with a marital divorce and what do you get? Find out in this week’s New York Business Divorce.
Continue Reading The Art of Manager Removal
If you want to find out what can happen when an LLC agreement authorizes member removal for any or no reason but doesn’t address compensation for the terminated member’s interest, read this week’s New York Business Divorce.
Continue Reading LLC Forced Buy-Out Pits Fair Value Against Fair Market Value Against Power to Amend Operating Agreement
This week’s post considers a recent decision from New York County Commercial Division Justice Borrok, who offers well-reasoned guidance on the separateness between claims to specifically enforce a buy-sell agreement, on the one hand, and damages claims, on the other.
Continue Reading Never the Twain Shall Meet: Damages Claims Do Not Offset the Purchase Price in Buy-Sell Agreements
The interplay between the default rules of the LLC law and the members’ agreement sometimes gets complicated. In a duo of recent decisions from Justice Cohen, that interplay took center-stage when a majority of members invoked the default rules in an attempt to oust the managing member from authority.
Continue Reading A Two-Act Play of LLC Default Rules and Manager Removal
Preliminary injunctions are a powerful tool in the business divorce litigator’s toolbox, and they often involve a race to the courthouse. This week’s post offers a reminder that sometimes, that race is critical; courts will be more inclined to preserve the status quo with a preliminary injunction than to undo action with one.
Continue Reading Too Little, Too Late: Court Sides with Ousted Member, but Denies Preliminary Injunction Undoing Termination
A corporation and a dissident shareholder enter into agreement where the dissident shareholder agrees to receive regular payments in exchange for staying away from the Company’s business. What happens when the outspoken shareholder dies? In Stile v C-Air Customhouse Brokers-Forwards, Inc., Index No. 656575/2020 [Sup Ct, New York County 2021], the New York County Supreme Court declined to dismiss a suit by the estate of a shareholder subject to a stay away settlement agreement on the grounds that the stay away obligations did not expressly apply to the shareholder’s successors.
Continue Reading Stay Away Settlement Between Closely-Held Corporation and Dissident Shareholder Goes Away Upon Shareholder’s Death
In this week’s New York Business Divorce, read about the plight of a Brooklyn beer brewing company founder whose co-members allegedly attempted to “freeze out” his interest by way of a forced dilution and ouster from management, and his efforts to fight back with a start-of-the-case preliminary injunction motion.
Continue Reading Court Enjoins Dilution of Brewing Company LLC Membership Interest
In a decision of apparent first impression last month, Justice Nancy Bannon of the Manhattan Supreme Court issued an injunction against the holding of a corporate election under BCL § 619. Minority shareholders facing an anticipated election called by a rival majority would be wise to consider the roadmap to injunctive relief charted by the plaintiffs here.
Continue Reading Stop the Vote: Injunction Halts Shareholders Meeting Pursuant to Courts’ Broad Power to Review Corporate Elections
There are few issues involving LLCs more likely to generate litigation than the expulsion of a member, especially when the expelled member is denied any payout for its interest, as occurred in the case highlighted in this week’s New York Business Divorce.
Continue Reading Be Careful What You Say. It May Get You Expelled From Your LLC.