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Recent Appellate Rulings Address Novel Issues in General Partnership Disputes

The era of the old-fashioned general partnership long ago petered out, largely displaced by subchapter S corporations and, in the last few decades, limited liability companies, both of which allow pass-through taxation...more

Summer Shorts: An Unusual Application of LLC Law § 608 and Other Decisions of Interest

Welcome to this 14th annual edition of Summer Shorts. This year’s edition features brief commentary on three recent decisions by New York courts in business divorce cases. The featured cases involve a suit pitting three...more

Did Chancery Court Just Crack Open the Door to Equitable Dissolution of LLCs?

Delaware Chancery Court’s contractarian approach to all things LLC, embedded statutorily in Section 18-1101(b) of the Delaware LLC Act (“It is the policy of this chapter to give the maximum effect to the principle of freedom...more

It Takes More Than a Litigation Tsunami Between Hostile Members to Obtain Judicial Dissolution of a Realty-Holding LLC

Count ’em: At the time A sued B for judicial dissolution of one of their several jointly owned companies, there are not one, not two, not three, but eight pending lawsuits between the two 50/50 business partners who first...more

Battle for Company Control Turns on Conflicting Copies of Operating Agreement Amid Accusations of “Old-Fashioned Forgery”

“This case (and its many state-court siblings) has a tortured history,” is the opening line in Judge Subramanian’s decision. The “siblings” are five or so related lawsuits filed in New York State Supreme Court beginning in...more

Crossing the Hudson: Recent Business Divorce Decisions from Yonder States

Folks who’ve been following this blog for years know that periodically I like to venture beyond New York’s borders to find and report on interesting decisions from other states in business divorce cases....more

New York Appellate Court’s Split Decision Involving Delaware LLC Pits “Harsh” Contractarianism Against “Fundamental Fairness”

Last week, the Manhattan-based Appellate Division, First Department, handed down one of the more intriguing decisions by a New York court I’ve seen in a long time involving a dispute between LLC members....more

Enforcing the Guardrails on Transactions Involving Interested Directors of Close Corporations

In my business divorce practice I deal with many closely held corporations that have only a few or perhaps just two shareholders, each of whom is actively involved in running the business. Within that category are many...more

The Perils of Indeterminate LLC Membership Interests, Redux

Capital contributions by business owners are the lifeblood of any newly formed business entity. Typically the lifeblood consists of cash, but not always. In many instances the contribution may consist of tangible (e.g., real...more

Top 10 Business Divorce Cases of 2023

Some years are easier than others to select the most significant business divorce cases. In this, the 16th year I’ve published this top-10 list, the task is made especially difficult by a veritable flood of court decisions...more

Judicially Expelled Member Pays Heavy Price For Abandoning LLC

Last month, in Flor v Greenberg Farrow Architectural Inc., a three-judge panel of the New Jersey Appellate Division handed down an opinion with important lessons for business owners and practitioners in states that have...more

New York LLC Caselaw’s Greatest Hits

I recently had the privilege of speaking to an audience of judges of the New York Supreme Court Commercial Division at Fordham Law School’s Eileen Bransten Institute on Complex Commercial Litigation. Naturally, the topic was...more

Use Caution When Amending Your Operating Agreement Without Unanimous Consent

In my experience, most operating agreements of New York LLCs include a provision barring amendments unless made in writing and executed by all members. Such provisions are especially prevalent with smaller, member-managed...more

Eastland Redux: Do Close Corporation Shareholders Have a Direct Claim Against Directors For Taking Disguised Distributions?

Earlier this year, using as a springboard the Maryland intermediate appellate court’s decision in Eastland Food Corp. v Mekhaya, I posted about a topic on which there’s little or no New York law, viz., whether a complaint for...more

When Is It Too Late to Sue for Shareholder Oppression?

Potential client sits down with business divorce lawyer and says, “I’m a minority shareholder in XYZ Corp. I’ve been completely frozen out by the majority. Can you help me?” The lawyer says, “Absolutely. New York law gives...more

Can One 50% Shareholder Sue the Other in the Company Name on the Company Dollar? Answer: It Depends

In the menagerie of closely held companies, those owned and controlled by 50/50 business partners pose unique benefits and challenges. On the benefit side, co-equal ownership and control can foster cooperation,...more

Take the Business Divorce Pop Quiz!

It’s been many years since our last pop quiz for all you business divorce aficionados. Time for another. See how many you get right before you read the answers...more

Recent Decisions Enforce LLC Member’s Right of First Refusal, Restrict Partnership Accounting, and Allow Damages Claim for Breach...

Someday, perhaps, I’ll find the comedic inspiration to come up with a joke that begins, “An LLC, a partnership, and a close corporation walk into a bar . . ..” Until then, I’ll have to satisfy myself with writing about an...more

Operating Agreement Trumps Postnup in High Stakes Battle Over Transfer of LLC Interest

Husband owns 99% membership of manager-managed LLC. Children own remaining 1%. Postnuptial agreement says husband’s “interest” in LLC goes to wife. LLC agreement says any transferee is not admitted as a member absent the...more

The Pathology of Deadlock Dissolution

It seems a bit exaggerated to liken the deterioration of a relationship between 50/50 business partners to a fatal disease, but in the case of Pathology Associates of Ithaca, P.C., recently pronounced dead by act of judicial...more

And a Time to Every Purpose Under . . . the Operating Agreement?

It’s a bit of a stretch to suggest that King Solomon prophesied the standard for judicial dissolution of LLCs, but there it is: under New York’s judicially construed standard for involuntary dissolution under Section 702 of...more

Wrongful Dissociation Under RUPA: Toto, We’re Not in New York Anymore

Unlike the vast majority of states, New York hasn’t adopted the Revised Uniform Partnership Act (1997) (“RUPA”). A recent appellate decision by a court in a neighboring RUPA state — New Jersey — highlights the very different...more

Is Loss Sharing an “Indispensable Essential” of Partnership?

What makes a partnership a partnership? What makes a partner a partner? To be clear, I’m referring to partners in a general partnership....more

Summer Shorts: LLC Dissolution and Other Recent Decisions of Interest

Welcome to the 12th annual edition of Summer Shorts. This year’s edition features brief commentary on a handful of recent decisions by New York trial judges and appellate courts in a variety of business divorce cases...more

Minority Shareholder’s Petition to Dissolve Seltzer Business Loses Its Fizz

In 1950, Sam Hoffman and his two sons, Hyman and Melvin, founded Brooklyn-based Cornell Beverages, Inc. to manufacture and distribute seltzer. Those were the days when “seltzer men” made weekly home deliveries of cases of...more

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