I’ve represented clients on both sides of freeze-out mergers of privately owned business entities, so I’m very familiar with their uses, misuses, potential advantages, and potential disadvantages to both freeze-ors and freeze-ees.
Over the years this blog has featured numerous articles about cases involving freeze-out mergers which you can readily access by clicking on the Topics dropdown menu on the right sidebar and selecting Freeze-Out Merger.
If you do, you will find that, when it comes to litigation over the validity of a freeze-out merger, as opposed to valuation contests triggered by a freeze-out merger, most of the reported New York court decisions over the last 10+ years involve limited liability companies. I attribute the phenomenon to the relatively young age of the LLC Law’s merger-related provisions compared to their gray-haired Business Corporation Law counterparts, and the absence thus far of appellate case law construing those provisions.
Which makes all the more interesting a decision last week by Manhattan Commercial Division Justice Jennifer G. Schecter in Van Horne v Ben-Dov, preliminarily enjoining a freeze-out merger of a close corporation for lack of a valid business purpose. In the interest of full disclosure, my firm and I along with my colleague Peter Sluka represent the plaintiffs in the case. Continue Reading “Rank Pretext Will Not Do”: Court Enjoins Freeze-Out Merger With No Corporate Benefit