Courtesy of a recent decision by Brooklyn Supreme Court Justice Leon Ruchelsman, this week’s New York Business Divorce examines a case in which the court dismissed a petition for judicial dissolution of an LLC after finding that the petitioner failed to show he possessed a membership interest.
Continue Reading Court Looks to Partnership Law in Ruling Against Petitioner’s Status as LLC Member

The Latin maxim, “equity aids the vigilant, not those who slumber on their rights,” steals the show in this week’s New York Business Divorce featuring a recent New Jersey appellate ruling affirming the dismissal of a challenge to the conversion of a limited partnership to an LLC.
Continue Reading In Dispute Over Partnership’s Conversion to LLC, Court Finds No Duty to “Spoon-Feed” Sophisticated Investor

A Manhattan appellate panel’s ruling last month provides a cautionary lesson about the need to anticipate and address tax issues, including potential taxes on phantom income, when negotiating buyout settlements involving shares in passthrough entities. You’ll find it in this week’s New York Business Divorce.
Continue Reading Negotiating a Buyout? Don’t Overlook Taxes on Phantom Income

A recent decision by Justice Marcy Friedman draws attention to a somewhat rare breed of minority shareholder oppression involving the controlling shareholder’s repudiation of the petitioner’s stock ownership. It’s a case you won’t want to miss, in this week’s New York Business Divorce.
Continue Reading Is Denial of Shareholder Status Shareholder Oppression?

“Is she or isn’t she a shareholder? Only her tax preparer knows for sure.” It may not be quite as catchy as the famous Clairol commercial, but it’s a good entreaty to read this week’s New York Business Divorce highlighting a recent appellate ruling in a dissolution case in which the petitioner unsuccessfully relied on tax returns to prove his shareholder status.
Continue Reading Form K-1s Do Not Always a Shareholder Make

A recent Delaware Chancery Court decision teaches an important lesson for drafters of buy-out agreements involving pass-through entities and taxes on “phantom” income allocated to a former owner. Learn more in this week’s New York Business Divorce.
Continue Reading Delaware Case Provides Drafting Lesson for “Phantom” Income Provision in Buy-Out Agreement

Earlier this month, in a case called Reichman v. Reichman, the Brooklyn-based Appellate Division, Second Department, reversed a lower court’s decision and granted a preliminary injunction in a bitter feud between father and son over the ownership of a dot-com business organized as an LLC. Don’t miss it in this week’s New York Business Divorce.

Continue Reading Father May Not Know Best: Appeals Court Grants Injunction in Son’s Bid to Establish Majority Ownership of LLC

Tax analysis is a critical part of the business divorce attorney’s job when it comes to fashioning a shareholder buy-out agreement that, among other things, protects the selling shareholder from personal income tax liability on non-distributed or “phantom” net income that later may show up on the shareholder’s Schedule K-1. This week’s New York Business Divorce looks at a recent decision by Manhattan Supreme Court Justice Judith Gische in a fight over the tax consequences of a buy-out settlement of a corporate dissolution.

Continue Reading Beware Taxes on Phantom Income When Entering Into Shareholder Buy-Out Agreement