How exclusive is the “exclusive” fair value appraisal remedy of Business Corporation Law § 623? So exclusive, according to the Second Department, that the statute bars a shareholder who consented to an asset sale from suing the other shareholder for making off with the sale proceeds after the closing. Let’s unpack this harsh result in this week’s New York Business Divorce.
Continue Reading Seller Beware: The “Exclusive” Fair Value Appraisal Remedy Really is Exclusive
Contracts with “prevailing party” fee-shifting provisions offer the tantalizing, coveted prospect of the winner recovering attorneys’ fees from the loser in legal disputes over the contract’s breach. But when the parties bombard each other with legal claims, and neither recovers on much (or any) of them, the hard question of whether either side (or any side) “prevailed” can lead to years of litigation within litigation. Read more in this week’s New York Business Divorce.
Continue Reading “Prevailing Party” Attorneys’ Fee Provisions
Just a few weeks ago, I commented on a recent uptick in disputes centered on the breakup of professional services firms. In those disputes, we expect that the demands of the legal, accounting, and medical professions draw individuals with keen attention to detail, focused on documentation, and prepared for all contingencies. Less expected is the irony that many attorneys, accountants, and medical professionals fail to bring those attributes to the table when organizing their business relationships.
The result of that failure is a tinderbox—poorly defined “partnership” relationships, mixed with high profit margins, difficult to value businesses, and type A owners willing to litigate their disputes. The right spark triggers bitter and hotly contested litigation. That part-legal, part-psychological phenomenon explains why business divorces of professional services corporations—especially law firms—can get complicated fast.
Motivated by that uptick, Becky Baek and I were pleased to recently present a CLE on the complexities that arise in the dissolution or breakup of law firms. Here are the highlights.Continue Reading Special Considerations for Law Firm Breakups
This week’s post discusses what happens when shareholders of a Professional Corporation retire without an agreement governing the redemption of their shares.
Continue Reading Must a Professional Corporation Redeem the Shares of its Retired Shareholders?
This week’s New York Business Divorce undertakes a post-mortem of sorts on a case involving the judicial dissolution of a pathology medical practice with 50/50 shareholders.
Continue Reading The Pathology of Deadlock Dissolution
In this week’s New York Business Divorce, read about the history and development of the doctrine of tax estoppel, including two strands of competing case law emanating from a pair of New York State Court of Appeals decisions reaching opposite conclusions about the extent to which one may prove ownership status in a closely-held business based upon estoppel.
Continue Reading The Doctrine of Tax Estoppel in Ownership Status Disputes
If a Schedule K-1 lists you or your client as a “general partner” and 2% owner of a partnership, is that the end of the story for proving ownership status? This week, we consider that question in the context of a long-running litigation between a well-known insurance litigation firm and its former “partner” over his standing to sue to dissolve the business.
Continue Reading The Law Firm “Partner”- A Rose by Any Other Name . . .
You won’t want to miss this week’s New York Business Divorce featuring a recent decision in which the court found minority shareholder oppression based on “disrespectful and unfairly disproportionate treatment of a female shareholder by the male majority in a closely held corporation.”
Continue Reading Minority Shareholder Oppression in the #MeToo Era
This week’s New York Business Divorce examines an interesting appellate ruling from Colorado denying enforcement of a non-compete against a shareholder-employee of a medical practice who dissented from a merger and demanded payment for the fair value of his shares.
Continue Reading You Dissented From a Merger. Are You Bound by Your Non-Compete?
Buy-out and retirement obligations in professional practices can trigger a contentious race to be the first to resign or retire when hard financial times hit, which is what happened in the case highlighted in this week’s New York Business Divorce.
Continue Reading Race to the Exit as Professional Practice Falters