Grounds for Dissolution

Subscribe to Grounds for Dissolution via RSS

Estate planners frequently utilize limited liability companies to separate management and economic interests. This week’s New York Business Divorce examines a fascinating decision last month by the Delaware Chancery Court dismissing a dissolution petition brought by the trustees of an inter vivos trust that held almost all of the LLC’s economic interest but none of the voting rights or management control.
…
Continue Reading “Unusual Actions Breed Unusual Outcomes”: Delaware Court Dismisses Non-Voting Trust’s Action to Dissolve LLC Born of Estate Plan

On January 26th, in a case called Matter of 1545 Ocean Avenue, LLC, the Appellate Division, Second Department, became the first New York appellate court since the LLC Law’s enactment in 1994 to articulate a standard for judicial dissolution of limited liability companies. Read about Justice Leonard Austin’s scholarly opinion for the court, from which two justices dissented in part, in this week’s New York Business Divorce.
…
Continue Reading It Only Took 16 Years: New York Appellate Court Defines Standard for Judicial Dissolution of Limited Liability Companies

Case law involving judicial dissolution of LLCs is still in its infancy. A recent Delaware Chancery Court decision takes another small developmental step, while also highlighting the need for operating agreement buy-sell provisions that stand a reasonable chance of avoiding business divorce litigation. It’s in this week’s New York Business Divorce.
…
Continue Reading Two-Member LLC Operating Agreement Contains Recipe for Dissension and Litigation

When majority shareholders, for good or bad reason, terminate the minority shareholder’s employment in a closely held company that pays no dividends, is the minority shareholder’s at-will employment status a defense to an involuntary corporate dissolution proceeding? The answer arrives in this week’s New York Business Divorce courtesy of a recent decision by Justice Marily Shafer in the case of Ambar v. Devington Technologies, Ltd.
…
Continue Reading Fired Minority Shareholder’s Oppression Claim Not Barred by At-Will Employment Provisions in Shareholders’ Agreement

The defense of “unclean hands” frequently is employed against petitions for involuntary corporate dissolution. A recent decision by Justice Stephen Bucaria, examined in this week’s New York Business Divorce, highlights the special considerations attendant to the defense in 50/50 deadlock dissolution cases, where the focus is less on fault and more on the existence of dissension.
…
Continue Reading “Unclean Hands” Defense Can Backfire in Deadlock Dissolution Case

A fight over ownership of a Long Island marina leads to an order granting corporate dissolution and awarding counsel fees based on the controlling shareholders’ unreasonable denial of the petitioning shareholders’ 50% ownership. Read about Justice Stephen Bucaria’s decision in Rosenfeld v. Luccaro in this week’s New York Business Divorce.
…
Continue Reading Controlling Shareholder’s Unreasonable Refusal to Admit Petitioners’ Stock Ownership Constitutes Ground for Corporate Dissolution, Incurs Award of Attorney’s Fees

Two feuding 50-50 shareholders enter a buy-sell option agreement in which either one can offer his shares to the other at a fixed price and, if the offer is declined, the corporation is voluntarily dissolved. One of them later offers his shares. The other declines. Sounds like simple plan to avoid a messy court battle, right? Not quite, as you’ll find out in this week’s New York Business Divorce discussing a recent decision by Justice Ira Warshawsky.
…
Continue Reading Court Grants Dissolution, Rejects Claim that Failed Buy-Sell Agreement Was “Ploy” by Petitioner to Take Over Corporation’s Retail Store Lease for His New Business

Did you know that the Surrogate’s Court has jurisdiction over corporate dissolution proceedings involving the estate of a deceased shareholder? Read more in this week’s New York Business Divorce highlighting a recent appellate decision affirming an award in favor of the estate of a minority shareholder arising from a petition for judicial dissolution of an accounting firm.
…
Continue Reading Majority Shareholders of Accounting Firm Held Liable for Value of Deceased Minority Shareholder’s Interest After They Formed New Firm Using Old Firm’s Assets and Good Will

This week’s New York Business Divorce features a recent decision by Justice Bernard Fried granting dissolution of an LLC owned 50-50 by two members locked in several highly contentious lawsuits. The decision addresses standing of a membership interest assignee to seek dissolution, and whether deadlock can establish ground for dissolution of a passive investment holding company.
…
Continue Reading Court Grants 50% LLC Member’s Petition for Judicial Dissolution of Passive Holding Company

A majority shareholder’s breach of fiduciary duty owed a minority shareholder may constitute oppressive action within the meaning of the judicial dissolution statute. But does oppressive conduct constitute breach of fiduciary duty? A recent federal court decision suggests so, but is it right? Read this week’s New York Business Divorce and see for yourself.
…
Continue Reading Fiduciary Breach Can Result in Shareholder Oppression, But Is Shareholder Oppression a Breach of Fiduciary Duty?