Once in a while, a case comes along to remind us to think twice before getting involved in expensive litigation between business partners over a defunct, insolvent company. Mazel Capital v. Laifer, recently decided by Justice Shirley Werner Kornreich is such a case. It’s in this week’s New York Business Divorce.
Continue Reading Business Partners Fighting Over the Company’s Corpse

The Zelouf case returns to the spotlight in this week’s New York Business Divorce, occasioned by Justice Shirley Kornreich’s decision last month denying a motion to reargue the court’s refusal to apply a marketability discount in valuing the shares of a dissenting minority shareholder of a family-owned business.
Continue Reading Court’s Rejection of Marketability Discount in Zelouf Case Guided by Fairness, Not “Formalistic and Buzzwordy Principles”

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

The statute governing LLC mergers requires a member vote at a meeting to be held on at least 20 days notice. In Slayton v. Highline Stages, LLC, the majority members used written consents in lieu of a meeting to approve a freeze-out merger, which the frozen-out minority member challenged. Did she succeed? Find out in this week’s New York Business Divorce.
Continue Reading No Meeting, No Vote Required for LLC’s Freeze-Out Merger Approved by Majority’s Written Consents

Last week’s post highlighted Justice Kornreich’s rejection of a marketability discount in the Zelouf case, a dissenting shareholder appraisal proceeding. In this week’s Part Two, New York Business Divorce examines a number of additional issues of interest in the Zelouf decision, including tax-affecting, control premium, and damages for quasi-derivative claims.
Continue Reading Zelouf (Part Two): Fair Value Ruling Addresses Range of Issues

This week’s New York Business Divorce presents the first of a two-part examination of Justice Shirley Kornreich’s must-read decision in Zelouf International v. Zelouf, a dissenting shareholder appraisal proceeding in which the court rejected application of a marketability discount.
Continue Reading Zelouf (Part One): Marketability Discount Rejected in Fair Value Proceeding

Tenant-shareholders in co-op apartments occasionally fall into the same kinds of internal disputes over corporate governance experienced by shareholders in any other kind of closely held corporation. This week’s New York Business Divorce highlights a recently decided battle for board seats among co-owners of a small Manhattan co-op, in which the outcome turned on the court’s construction of arguably out-of-sync provisions in the by-laws and shareholders’ agreement.
Continue Reading Legal Battle Over Board Seats Splits Neighbors in Manhattan Co-op

In this week’s New York Business Divorce you’ll read about two recent cases in which New York courts decided disputes between members of Delaware LLCs over the interpretation of provisions — one dealing with a distribution waterfall and the other with compulsory buyback of membership interests — found in highly sophisticated operating agreements.
Continue Reading Waterfalls and Compulsory Buybacks: New York Courts Decide Disputes Involving Sophisticated Delaware LLC Agreements

A shareholder’s derivative action alleging misappropriation and waste by the controlling shareholders, filed in 2009, was scheduled for trial earlier this month. About three weeks before trial, the controlling shareholders initiated a freeze-out merger for the specific purpose of defeating the suing shareholder’s standing to maintain the action. Did it work? Find out in this week’s New York Business Divorce.
Continue Reading Court Permits Freeze-Out Merger on Eve of Trial of Shareholder Derivative Action

By statute a member can seek judicial dissolution of an LLC, but can a member of a member seek dissolution by way of a derivative claim under Tzolis v. Wolff? Find out in this week’s New York Business Divorce featuring Justice Kornreich’s recent decision in JG Club Holdings, LLC v. Jacaranda Holdings, LLC.

Continue Reading Can a Member of a Member of an LLC Sue to Dissolve the LLC?