The double whammy of a marital divorce of spouses who also co-own a closely held business — or are deemed to co-own the business in community property states — can be avoided throtugh creative and careful business and legal planning, says Dallas attorney Ladd Hirsch in an engaging interview for the Business Divorce Roundtable podcast, highlighted in this week’s New York Business Divorce.
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Too Clever By Half? Court Permits Suit Challenging Share Increase Tied to Transfer Restrictions
Stock transfer restrictions in closely held corporations are routinely upheld by courts. So are increases in authorized shares that treat existing shareholders uniformly. But sometimes, as in the case highlighted in this week’s New York Business Divorce, the combined effect of the two may breach duties owed by controllers to the minority.
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Once Opened, The Door to Judicial Dissolution and Buy-Out Is Hard to Close
The lesson of the case highlighted in this week’s New York Business Divorce is simple: Don’t file for dissolution under the shareholder oppression and looting statute unless you’re prepared for the opposing shareholders to elect to purchase your shares for fair value, because you may not be able to walk it back.
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Ruling Upholds Shareholder’s Right to Inspect Subsidiary’s Books and Records
In a decision of apparent first impression in New York, an appellate panel last week upheld the common-law right of a shareholder to inspect the books and records of the corporation’s wholly-owned subsidiary. Get the full story in this week’s New York Business Divorce.
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The Elusive Surcharge in Dissolution Proceedings
New York’s statutes authorizing a judicial dissolution petition by oppressed minority shareholders, and granting respondents a corresponding right to elect to purchase the petitioner’s shares, include a provision for a “surcharge” upon controlling shareholders for wrongful dissipation or transfer of corporate assets. It’s a rarely litigated provision, as evidenced by a court decision last month which may be the first ever reported case in which a surcharge claim was upheld. Learn more in this week’s New York Business Divorce.
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Minority Oppression in LLCs: Interview With Professor Douglas Moll
Minority oppression in the LLC is drawing greater attention in the legal community as the proportion of business associations formed as LLCs continues to outstrip close corporations and partnerships. This week’s New York Business Divorce highlights and links to a Business Divorce Roundtable podcast interview with Professor Douglas Moll, one of the country’s leading authorities on minority oppression in the closely held business entities.
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Non-Egregiously Aggrieved Minority Shareholder Can’t Sue for Common-Law Dissolution
Common-law dissolution requires “egregious” conduct by the majority, but what constitutes egregious conduct? Read this week’s New York Business Divorce to find out how one Manhattan judge recently defined it.
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Bad Faith Defense Gets Boost in LLC Dissolution Case
The bad faith defense has been recognized in close corporation dissolution cases involving both minority shareholder oppression and shareholder deadlock. How about LLC dissolution? This week’s New York Business Divorce looks at a recent Tennessee court’s decision upholding the defense in a dissolution case involving a Delaware LLC with two 50/50 members.
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Conflict in the Family-Owned Business: Interview With Professor Benjamin Means
Business divorce on steroids. That’s how I describe the tenor of litigation that can erupt when members of a family-owned business have a falling out.
No one has devoted more scholarship to the challenging intersection of law and conflict in the family-owned business than Benjamin Means, Associate Professor of Law at the University of South Carolina School of Law.
Longtime readers of this blog may recall a two-part online interview of Ben that I posted a few years ago (read here and here), in which he answered a series of questions about his groundbreaking law review article entitled Non-Market Values in the Family Business. The article uses social science and expansive notions of contractual relations in advocating for courts to give greater weight to what he calls “family values” in adjudicating corporate dissolution and other disputes among shareholder-members of the same family.
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When Will Then Be Now? Court Construes LLC Agreement’s Advancement Provision With An Assist From Spaceballs
This week’s New York Business Divorce goes to the movies, sort of, as it looks at a recent Delaware Chancery Court decision granting a former LLC manager’s claim for advancement of legal expenses, in which the court drew comparison between the defendant’s losing argument and a scene from the Mel Brooks film Spaceballs.
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