In the aftermath of last year’s Court of Appeals decision in Tzolis v. Wolff, giving LLC members a common law right to bring derivative actions, the Appellate Division, First Department, recently faced the question: Does Tzolis mandate recognition of an LLC member’s common law right to compel an equitable accounting of the LLC’s business affairs? See how the court answered in this week’s New York Business Divorce.
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Continue Reading Court Adds Accounting Remedy to LLC Members’ Arsenal

It’s a familiar story line to readers of this blog: LLC minority member sues for dissolution. Majority members adopt resolution requiring all members to contribute cash to pay legal expenses in the defense of the litigation. Plaintiff cries foul. See how it played out in a recent decision by the Appellate Division, Second Department, in this week’s New York Business Divorce.
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Continue Reading LLC Dissolution Case Illustrates Peril to Minority Member of Compulsory Capital Contribution Provision in Operating Agreement

This week’s New York Business Divorce highlights an important new decision by the Delaware Court of Chancery granting a petition for dissolution of a deadlocked and financially crippled limited liability company.
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Continue Reading Delaware Court of Chancery Grants Deadlock Dissolution Petition for LLC

This week’s New York Business Divorce highlights an important decision by the Appellate Division, First Department, construing rights of advancement and indemnification for litigation expenses in a battle royal between majority and minority members of a limited liability company.
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Continue Reading New York Court Follows Delaware Law to Construe Advancement and Indemnification Provisions of Florida LLC’s Operating Agreement

If you’re going to accuse your business partner of bad acts and ask for judicial dissolution of the business, be prepared to settle or take the case all the way to trial. That seems to be the message given to the petitioner in a recent case highlighted in this week’s New York Business Divorce, when the court turned down her request to withdraw the case “without prejudice.”
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Continue Reading Court Rejects Bid by Corporate Dissolution Petitioner to Voluntarily Withdraw Case Without Prejudice

A recent appellate decision, ordering a new stock valuation hearing in a case marked by incomplete expert testimony and inadequate findings by the judicial hearing officer who heard the valuation evidence, prompts thoughts on the use of hired-gun experts in this week’s New York Business Divorce.
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Continue Reading Stock Valuation, Dr. Pangloss, Mr. Scrooge and Do-Overs

Have room for one more 2008 top-10 list? This week’s New York Business Divorce highlights the 10 most interesting business divorce cases from last year, with updated case citations and links to previous write-ups.
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Continue Reading Top 10 Business Divorce Cases of 2008

DUE TO TECHNICAL GLITCH, THIS ENTRY WAS PUBLISHED THIS MORNING INCOMPLETE. THIS WILL LINK TO THE COMPLETE ENTRY. MY APOLOGY FOR THE DUPLICATE EMAIL NOTIFICATION. P.A.M.
The statute governing buyouts in oppressed shareholder dissolution cases dictates that the fair value of the shares is to be determined as of the day before the date on which the dissolution petition was filed. This week’s New York Business Divorce looks at a quirky case involving a fight over which of two proposed valuation dates was the proper one, with $1,000,000 in assets hanging in the balance.
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Continue Reading Court Rejects Attempt to Vary Statutory Valuation Date in Oppressed Shareholder Buyout

A recent decision by Commercial Division Justice Charles E. Ramos in the case of Arfa v. Zamir grabs the spotlight in this week’s New York Business Divorce. The subject is an important one to business owners and their counsel: Does a general release in an out-of-court agreement between business partners/fiduciaries provide any protection against allegations of fraudulent nondisclosure?
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Continue Reading Fiduciaries, the Duty to Disclose and the Incredible Shrinking Release

Does a minority member of an LLC have a right to intervene in an action against the LLC by a creditor? How about if the creditor’s claim arises from collusion or other impropriety by the controlling member? This week’s New York Business Divorce provides answers courtesy of a recent appellate court ruling in the curious case of Baron v. Rocketboom LLC.
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Continue Reading Court Bars Minority Member From Intervening in Creditor’s Suit Against LLC