Family-Owned Businesses

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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

A recent decision by Queens County Commercial Division Justice Orin Kitzes in Matter of Adelstein illustrates the crucial role of forensic accounting in testing and adjusting a company’s financial statements for purposes of stock valuation in an oppressed minority shareholder case. Read more in this week’s New York Business Divorce.
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Continue Reading Forensic Accounting Helps Wins the Day in Oppressed Shareholder Stock Valuation Proceeding

An appellate ruling last month in DeMatteo v. DeMatteo Salvage Co. brings to a close the cautionary tale of an 8-year court battle among members of a family-owned business over the enforcement of a poorly designed buy-sell agreement. It’s in this week’s New York Business Divorce.
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Continue Reading An Ill-Fated Solution to an Ill-Fated Buy-Sell Agreement

Earlier this month, in a case called Reichman v. Reichman, the Brooklyn-based Appellate Division, Second Department, reversed a lower court’s decision and granted a preliminary injunction in a bitter feud between father and son over the ownership of a dot-com business organized as an LLC. Don’t miss it in this week’s New York Business Divorce.
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Continue Reading Father May Not Know Best: Appeals Court Grants Injunction in Son’s Bid to Establish Majority Ownership of LLC

Tax analysis is a critical part of the business divorce attorney’s job when it comes to fashioning a shareholder buy-out agreement that, among other things, protects the selling shareholder from personal income tax liability on non-distributed or “phantom” net income that later may show up on the shareholder’s Schedule K-1. This week’s New York Business Divorce looks at a recent decision by Manhattan Supreme Court Justice Judith Gische in a fight over the tax consequences of a buy-out settlement of a corporate dissolution.
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Continue Reading Beware Taxes on Phantom Income When Entering Into Shareholder Buy-Out Agreement

Business valuation junkies, rejoice! This week’s New York Business Divorce revisits the Giaimo case, a bitter family business dispute being litigated in Manhattan Supreme Court, following a decision last week by Justice Marcy Friedman concerning a fair value determination by Referee Louis Crespo of a stock interest in two real estate holding “C” corporations, in which the discounts for lack of marketability and for built-in gains taxes take center stage.
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Continue Reading Court Rejects Marketability Discount, Applies “Murphy Discount” for Built-In Gains, in Determining Fair Value of Shares in Real Estate Holding Corporations

When the company or majority shareholder elects to purchase a dissolution petitioner’s shares for fair value, how can the selling shareholder be sure the purchaser will be able to pay the eventual award? The statute offers relief in the form of a bonding requirement, as illustrated in a recent case decided by Nassau County Commercial Division Justice Stephen A. Bucaria. Get the story in this week’s New York Business Divorce.
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Continue Reading Bonding a Fair Value Award: When Can the Court Require It?

A post-trial decision last month by Justice Emily Pines in Matter of Wenger, a corporate dissolution case pitting father against son, addresses novel issues concerning shareholder standing and oppression remedies. It’s in this week’s New York Business Divorce.
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Continue Reading Splitting the Baby: Court in Oppressed Shareholder Dissolution Case Divides the Company Assets

What are the powers of the president of a close corporation to make major decisions in the ordinary course of business, such as entering leases, without obtaining board approval? Does it matter if the president knows he or she cannot obtain board approval for the proposed action? Read this week’s New York Business Divorce to see how these questions were answered by Rochester Commercial Division Justice Kenneth Fisher in a fascinating case pitting brother against brother in Hellman v. Hellman.
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Continue Reading Court in Hellman Case Re-Affirms Close Corporation President’s Authority to Sign Lease Without Board Approval

Last week I stopped by the courthouse in White Plains to watch the oral argument of the appeal by Paul “Junior” Teutul of American Chopper fame from the lower court’s decision on which I previously reported, compelling him to sell his shares in the custom motorcycle business to his father and television co-star, Paul “Senior” Teutul. Get the full story in this week’s New York Business Divorce.
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Continue Reading Court Hears Argument of Paul Jr.’s Appeal in American Chopper Buyout Dispute