Partnerships

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Derivative claims seeking recovery on behalf of the business entity frequently are brought in liitgation among the business’s co-owners. Often they are combined with direct claims seeking individual redress. A decision last week by a Manhattan appellate panel in Yudell v. Gilbert, featuring a signed opinion by Justice Karla Moskowitz, adopts Delaware’s approach to distinguish direct from derivative claims, which is crucial in determining whether the plaintiff must satisfy the requirement of pre-suit demand upon the entity’s controlling body. This week’s New York Business Divorce has the story.
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Continue Reading Appellate Decision in Partnership Dispute Clarifies Distinction Between Direct and Derivative Claims

Equitable remedy trumps pick-your-partner, is one way to describe the outcome in Garber v. Stevens, decided last month by Justice Eileen Bransten, who granted a motion by limited partners to remove the wrongdoing general partners of a real estate limited partnership and replace them with an LLC wholly owned by the limited partners. Read more about this unusual case in this week’s New York Business Divorce.
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Continue Reading The Court’s Equitable Power to Remove and Replace a Limited Partnership’s General Partner

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

This week’s New York Business Divorce features a pair of recent decisions by New York and Delaware courts addressing disputes between accounting firms and departing partners over entitlement to buy-out payments. Both are highly interesting decisions, especially for anyone involved in drafting agreements for professional firms.
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Continue Reading New York and Delaware Courts Decide Disputes Over Accounting Firm Buyouts

This week’s New York Business Divorce offers some “summer shorts” consisting of summaries of three recent decisions of interest including two by Justice Carolyn E. Demarest and a split decision by the Appellate Division, First Department.
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Continue Reading Summer Shorts: Stock Sale Under Duress and Other Recent Decisions of Interest

A recent decision by the Appellate Division, First Department, in Frame v. Maynard authorizes the imposition of so-called Rothko damages against a general partner who breaches fiduciary duty by misrepresenting the value of partnership assets when buying out the limited partners’ interests. Learn more in this week’s New York Business Divorce.
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Continue Reading Rothko Damages Awarded for General Partner’s Undervalued Buyout of Limited Partners’ Interest in Realty Company

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

The Partnership Law’s default provisions provide a roadmap for Justice Timothy Driscoll’s recent decision, highlighted in this week’s New York Business Divorce, involving the dissolution of a family real estate partnership following the death of one of its partners.
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Continue Reading Winding Up an Acrimonious Partnership Following Death of a Partner

The death in 2007 of Claudia Cohen, a well-known gossip columnist and socialite who married and divorced billionaire Ronald Perelman, led to a high-stakes litigation between her estate and her surviving brother over the valuation of the estate’s 50% share in a family partnership that directly or indirectly owned real estate interests with a market value over $20 million. A recent court decision ruled against the estate’s $11.5 million claim and, instead, enforced a $178,000 “net book value” buyout under the partnership agreement’s formula, also rejecting the estate’s argument that such a drastically below-market buyout was unconscionable. Read this week’s New York Business Divorce to get the full story.
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Continue Reading Court Rejects Unconscionability Argument in Family Partnership Valuation Case, Concludes that “Full and True Value” Equals “Net Book Value” as Defined by Agreement

Professional service corporations are “interesting” and “strange creatures”, says Justice Ira B. Warshawsky in a recent decision rejecting a claim for statutory buyout in a suit brought by a terminated partner in a law firm organized as a professional corporation. Get the story in this week’s New York Business Divorce.
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Continue Reading Terminated Member of Professional Corporation is Not Entitled to Statutory Stock Redemption