A corporation and a dissident shareholder enter into agreement where the dissident shareholder agrees to receive regular payments in exchange for staying away from the Company’s business. What happens when the outspoken shareholder dies? In Stile v C-Air Customhouse Brokers-Forwards, Inc., Index No. 656575/2020 [Sup Ct, New York County 2021], the New York County Supreme Court declined to dismiss a suit by the estate of a shareholder subject to a stay away settlement agreement on the grounds that the stay away obligations did not expressly apply to the shareholder’s successors.
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Settlement
A Pig in a Poke: The Rollercoaster Kadosh Settlement Litigation
In this week’s New York Business Divorce, a wild tale of a settlement achieved, settlement spurned, and a litigant threatened with incarceration for contempt in an intensely bitter, nine-year battle between two brothers over their Manhattan-based real property LLC.
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Negotiating a Buyout? Don’t Overlook Taxes on Phantom Income
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. …
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The Perils of Impromptu Buy-Out Settlement Agreements
In corporate dissolution cases, sometimes the pressure to get the deal done can lead to an impromptu buy-out settlement agreement being made in court and read into the record, without adequate consideration of the complexities and pitfalls involved in the transfer of shares and the consequences of default. A recent decision by Justice Darrell Gavrin in Matter of D’Angelo, highlighted in this week’s New York Business Divorce, provides a good example of the things that can go wrong. …
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