Compared to its Business Corporation Law, New York’s LLC Law provides greater latitude to LLC members when it comes to making management decisions without necessity of holding a formal meeting. A recent Delaware Chancery Court decision construing that state’s similar LLC statute sheds light on the interplay between the statutory default rule and operating agreement provisions that set forth voting procedures without mention of the members’ right to take action without a meeting. It’s in this week’s New York Business Divorce.
…
Continue Reading When Can LLC Members Act Without Holding a Meeting?

This week’s New York Business Divorce offers some “summer shorts” consisting of summaries of three recent decisions of interest including two by Justice Timothy Driscoll and another by Justice David Schmidt, featuring disputes over a liquidating receiver’s sale of the dissolved corporation’s real property and the requirements for pleading derivative claims.
…
Continue Reading Summer Shorts: Liquidating Receiver’s Authority to Compel Share Redemption and Other Recent Decisions of Interest

“I’ll sell you my shares, but you’ll have to take my job, too.” That’s the upshot of a recent decision by Commercial Division Justice Elizabeth H. Emerson, holding that a right of first refusal in a shareholders’ agreement required any third-party buyer to assume the selling shareholder’s job responsibilities, and on that basis invalidating a minority shareholder’s attempt to sell his shares to his father. Learn more in this week’s New York Business Divorce.
…
Continue Reading Court Invalidates Father-Son Stock Transfer Under Right of First Refusal

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.
…
Continue Reading Appellate Decision in Partnership Dispute Clarifies Distinction Between Direct and Derivative Claims

No one does “fair value” like the Delaware Court of Chancery. This week’s New York Business Divorce highlights three recent share appraisal decisions by that court, whose penetrating legal analysis of valuation issues leads the way for courts across the country.
…
Continue Reading Recent Fair Value Cases in the Delaware Chancery Court

This week’s New York Business Divorce features an interesting decision by Justice Stephen Bucaria addressing the attorney-client privilege concerning company counsel in a dispute between membership factions of an LLC. Don’t miss it.
…
Continue Reading Obtaining Discovery of the Company Lawyer in Business Divorce Cases: Privileged or Not?

A Manhattan panel of appellate judges last month enforced an LLC operating agreement’s provision giving the manager sole discretion — even at his “whimsy” or “impetuously” said the court — to determine a member’s sharing ratio of the firm’s profits. It’s worth reading in this week’s New York Business Divorce.
…
Continue Reading Court Upholds LLC Manager’s Broad Discretion Under Operating Agreement to Determine Member’s Profit Share

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.
…
Continue Reading The Court’s Equitable Power to Remove and Replace a Limited Partnership’s General Partner

In an unusual corporate dissolution case involving 50/50 shareholders decided last month by Justice Emily Pines, the court compelled a buyout of the petitioner’s shares by the other shareholder notwithstanding the latter’s consent to dissolution. Get the full story in this week’s New York Business Divorce.
…
Continue Reading Court Compels Buyout Despite Consent to Dissolution

The doctrine of “unclean hands” played a decisive role in a recent decision by Justice Emily Pines in Kimelstein v. Kimelstein, in which the court dismissed a dissolution petition brought by someone who admitted that he never formalized his stock interest to keep it hidden from his ex-wives and the government. It’s in this week’s New York Business Divorce.
…
Continue Reading Unclean Hands Defense Defeats Petitioner’s Shareholder Status in Corporate Dissolution Suit