The topic of mergers between two business entities designed to involuntarily extinguish the equity interest of a minority owner in exchange for cash is one of our favorites on New York Business Divorce. Almost invariably dubbed a “cash-out” merger by the majority owners effectuating the merger, and a “freeze-out” by the expelled minority owner, we’ve written about the legal rules, statutory procedures, and resulting fair valuation principles for these types of mergers many times. So when new cash-out a/k/a freeze-out merger cases come along, we get excited, hoping to glean new insights and possibly answer some unresolved questions raised by the devilishly arcane merger statutes.
Two weeks ago, Manhattan Supreme Court Justice Laurence Love issued two decisions in a pair of litigations following a corporation cash-out merger of a 19% shareholder, Alan Ades (“Alan”), from a family-owned corporation named Van Dale Industries, Inc. (“Van Dale”). The papers raised either directly or by implication a host of interesting legal issues, but the decisions in some ways represent an opportunity lost, as the Court provided little analysis for its holdings. So I’ll give my take on how the issues might be treated if considered on the merits. Continue Reading Questions Abound in Parallel Cash-Out Merger Rescission / Fair Value Appraisal Lawsuits