Expulsion and Removal

Court Rejects Oppressed Shareholder’s Bid for Dissolution or Buy-Out, Finds Money Damages Sufficient

By Peter J. Sluka on October 5, 2020

Posted in Dissolution Basics, Dissolution Defenses, Expulsion and Removal, Grounds for Dissolution

Not all misconduct by majority shareholders is worthy of dissolution or a compelled buy-out. The Court’s broad power under BCL 1104-a to craft appropriate remedies also includes the power to award money damages, and dissolution may not be appropriate where the alleged shareholder oppression was a discrete, one-time transaction.
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Summer Shorts: For-Cause Termination of LLC Member and Other Decisions of Interest

By Peter Mahler on August 17, 2020

Posted in Access to Books and Records, Common Law Dissolution, Discovery, Dissolution Procedure, Expulsion and Removal, Summer Shorts

This 10th annual edition of Summer Shorts presents brief commentary on four recent decisions of interest in business divorce cases in the New York courts along with a recent decision by the Mississippi Supreme Court upholding an unusual freeze-out remedy.
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The Curious Case of the Expelled LLC Member Bound by Operating Agreement He Never Signed

By Peter Mahler on February 3, 2020

Posted in Arbitration and Mediation, Derivative Actions, Expulsion and Removal, Operating Agreement

Shapiro v Ettenson, known as the case that made it extra dangerous for minority members of New York LLCs without written operating agreements, reappears in this week’s New York Business Divorce on the occasion of a recent decision concerning member expulsion. …
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The Perils of Indeterminate LLC Membership Interests

By Peter Mahler on October 14, 2019

Posted in Expulsion and Removal, LLCs, Operating Agreement

What do you get when you combine LLC membership interests determined by variable capital accounts with an off-the-shelf form operating agreement? Litigation, of course! Get the story in this week’s New York Business Divorce.
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Business Divorce in the Surrogate’s Court

By Franklin C. McRoberts on September 3, 2019

Posted in Derivative Actions, Dissolution Procedure, Expulsion and Removal

In this week’s New York Business Divorce, we consider an interesting question raised by the occasional overlap of two niche areas of law practice: the jurisdictional power of New York’s probate courts to resolve business divorce disputes.
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Statute Trumps LLC Agreement’s Voting Rights Provision in Dispute Over Manager’s Removal

By Peter Mahler on August 19, 2019

Posted in Expulsion and Removal, LLCs, Operating Agreement

This week’s New York Business Divorce examines a highly interesting appellate opinion in a California case centering on whether the operating agreement required unanimous member approval to remove the designated managing member.
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Does This Decision Put the Brakes on Non-Unanimous Amendments to Operating Agreements?

By Peter Mahler on October 8, 2018

Posted in Capital Call, Expulsion and Removal, Family-Owned Businesses, LLCs, Operating Agreement

It’s back! For the third week in a row, New York Business Divorce examines a decision by Manhattan Commercial Division Justice Saliann Scarpulla in a multi-faceted feud among members of the Yu family, this time requiring the court to balance the fiduciary duty owed by LLC managers against the right to amend the operating agreement without the consent of the affected minority member. …
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Judicial Dissolution and the Weaponized LLC

By Peter Mahler on September 24, 2018

Posted in Capital Call, Expulsion and Removal, Family-Owned Businesses, Grounds for Dissolution, LLCs, Operating Agreement

This weeks New York Business Divorce examines a recent decision by Justice Saliann Scarpulla, dismissing a complaint seeking judicial dissolution of two family-owned LLCs in which the plaintiff alleged that his siblings’ actions were in furtherance of a “personal vendetta.”…
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Repeat After Me: You May Not Expel a Member of a New York LLC Unless the Operating Agreement Says So

By Peter Mahler on September 17, 2018

Posted in Expulsion and Removal, LLCs

If you’re an LLC member or member’s lawyer thinking about expelling a misbehaving co-member, but without authorization to do so in the operating agreement, read this post and think again.
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The Cash-Out Merger Solution to the Problem Minority Owner

By Franklin C. McRoberts on March 19, 2018

Posted in Expulsion and Removal, Freeze-Out Merger

Are you in business with, or advising a business with, a disruptive minority partner, shareholder, or member? What can you do about it? In this week’s New York Business Divorce we consider one option – the “cash-out” or “freeze-out” merger.
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