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Professor Larry Ribstein recently published a highly informative paper called “Close Corporation Remedies and the Evolution of the Closely Held Firm” in which he relates the judicial dissolution remedy to the evolution of small business firms from partnerships to close corporations to the modern limited liability company. It’s essential reading for business divorce practitioners, and it’s in this week’s New York Business Divorce.
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Continue Reading Larry Ribstein on the Evolution of the Closely Held Firm and Judicial Dissolution Remedies

A recent decision by Commercial Division Justice Bernard Fried addresses an interesting issue concerning demand requirements for derivative actions involving manager-managed LLCs. Learn more in this week’s New York Business Divorce.
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Continue Reading May Majority Member of Managerless Manager-Managed LLC Maintain Derivative Action?

In Georgi v. Polanski, decided last month by Kings County Commercial Division Justice David Schmidt, the court addresses the right of a controlling LLC member to expel the non-controlling member upon his failure to comply with a capital call. It’s in this week’s New York Business Divorce.
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Continue Reading Not a Capital Idea: Making Unauthorized LLC Capital Calls

In this second installment of a two-part series, New York Business Divorce examines recent First Department decisions clarifying the standards for overcoming general releases given in the context of transactions with fiduciaries in closely held business entities, where the plaintiffs allege that the fiduciary fraudulently induced them to enter into the transaction. This week’s focus is on a case whose name should be familiar to regular readers of this blog, Arfa v. Zamir, 2010 NY Slip Op 06070 (1st Dept July 13, 2010).
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Continue Reading Recent Appellate Rulings Clarify Standards for Challenging Releases Given to Fiduciaries of Closely Held Business Entities: Part 2

This week and next, New York Business Divorce examines two recent First Department decisions clarifying the standards for overcoming general releases given in the context of transactions with fiduciaries in closely held business entities, where the plaintiffs allege that the fiduciary fraudulently induced them to enter into the transaction. This week’s focus is on Centro Empresarial Cempresa S.A. v. America Movil S.A.B. de C.V., 2010 NY Slip Op 04719 (1st Dept June 3, 2010).
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Continue Reading Recent Appellate Rulings Clarify Standards for Challenging Releases Given to Fiduciaries of Closely Held Business Entities: Part 1

The venerable, closely-held business corporation may be on its last legs. Looking at some recently published statistics on new entity filings, it’s clear that the young upstart, the limited liability company, has already far surpassed its elder. So why does New York lag behind the rest of the country in the LLC revolution? It’s in this week’s New York Business Divorce.
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Continue Reading Statistics Show New York Lagging in the LLC Revolution

The hydra-headed Ficus Investments litigation is the gift that keeps on giving, at least to students of business divorce. This week’s New York Business Divorce highlights the latest appellate decision in the case, in which the court reversed an order dissolving the limited liability company that managed the mortgage business at the center of the melee.
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Continue Reading Dispute Over Authenticity of Operating Agreement Leads to Reversal of Order Summarily Granting LLC Dissolution

Last week the Appellate Division, Second Department, affirmed a lower court’s order directing an “equitable” buyout of an LLC member who petitioned for dissolution, notwithstanding the omission of a buyout remedy in the LLC Law. Read about this important ruling in this week’s New York Business Divorce.
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Continue Reading Appeals Court Upholds Equitable Buyout Remedy in LLC Dissolution

It’s hard to imagine a more challenging fact pattern and set of legal issues for a law school exam than the one presented in real life in the recently decided case, Pappas v. Tzolis, involving a buyout among LLC members followed by the purchasing member’s sale of the LLC’s asset to an outside buyer for a price far in excess of the buyout, followed by a lawsuit by the former members claiming they were bamboozled by the buying member. Read all about it in this week’s New York Business Divorce.
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Continue Reading Does Operating Agreement’s Clause Permitting Competitive Activities Eliminate Member’s Fiduciary Duty to Disclose Negotiations to Sell LLC’s Assets Before Buying Out Co-Members?