“I don’t get no respect” was a famous Rodney Dangerfield comedy routine. It also could be ascribed albeit less comedically to tiebreakers assigned the often thankless task of resolving deadlock between 50/50 owners or...more
The restaurant business is on the skids amid the COVID-19 pandemic. Yelp reports that 60% of closed restaurants won’t re-open.
Apart from the pandemic, the success rate for new restaurants is dauntingly low. Surveys show a...more
When the management of a closely held business is controlled equally by two owners, it’s wise both to anticipate possible deadlock over major decisions and to provide in the constitutive documents a deadlock breaking...more
Don’t Miss the 2020 LLC Institute Virtual Meeting!
It’s that time of year again, when leading experts and practitioners in the field of closely held business entities gather for the LLC Institute’s spectacular CLE program....more
Interview with Bob Ambrogi on This Week In Legal Blogging -
Last week I had the pleasure of being interviewed for a live webcast by blogging pioneer, legal journalist, and LexBlog publisher and editor-in-chief Bob Ambrogi...more
“The Company is formed for any valid business purpose”
Nine seemingly benign words in the garden-variety operating agreement of a realty holding LLC. Nine words that, as one judge opined under similar circumstances some...more
Some years ago I had the good fortune to join the ABA Business Law Section’s Committee on LLCs, Partnerships and Unincorporated Entities which, among its other scholarly pursuits in the field of alternative entities,...more
I don’t know if empirical studies have been done comparing the relative frequency or ratio of disputes and litigation over member status in LLCs versus shareholder status in close corporations. My impression as an avid...more
LLC enabling legislation swept the country in the late 1980s through the mid 1990s. By the turn of the century we saw a trickle of litigation working its way through the courts involving disputes among LLC co-owners. A decade...more
The proverb “All for the want of a horseshoe nail” aptly describes the possibly mortal blow dealt by the Appellate Division’s recent decision in Favourite Ltd. v Cico, 2020 NY Slip Op 01463 [1st Dept Mar. 3, 2020], to a...more
The Comic Strip is the oldest stand-up comedy showcase club in New York City. Its co-founders Robert Wachs and Richard Tienken opened the club in 1975 on Manhattan’s Upper East Side....more
I’m always disappointed by appellate opinions that decide novel or unsettled issues in business divorce cases with little or no analysis. It seems like a lost opportunity to provide guidance in future cases....more
Welcome to this year’s edition of Winter Case Notes in which I highlight a collection of recent court decisions of interest to business divorce aficionados by way of brief synopses with links to the decisions for those who...more
2/24/2020
/ Appeals ,
Article III ,
Business Divorce ,
Business Litigation ,
Corporate Dissolution ,
Demand Futility ,
Derivative Suit ,
Shareholder Demands ,
Shareholder Litigation ,
Standing ,
Statute of Limitations ,
Time-Barred Claims
I’ve yet to see him make a court appearance, and hope I never do, but the Grim Reaper sure has a knack for disrupting business divorce litigation involving LLCs and limited partnerships....more
2/10/2020
/ Assignments ,
Automatic Stay ,
Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Commercial Court ,
Controlling Person ,
Decedent Protection ,
Derivative Suit ,
Dissolution ,
Family Businesses ,
Fiduciary Duty ,
Fraud ,
Limited Liability Company (LLC) ,
Limited Partnerships ,
Ownership Interest ,
Partnership Interests ,
Partnerships ,
Real Estate Market ,
Statutory Interpretation ,
Transfer of Control ,
Unfair Dealing
The case of Shapiro v Ettenson ranks as one of the more consequential ones in the realm of New York’s LLC jurisprudence....more
2/4/2020
/ Arbitration ,
Bad Faith ,
Breach of Contract ,
Business Divorce ,
Business Litigation ,
Capital Calls ,
Contract Disputes ,
Contract Terms ,
Damages ,
Expulsion ,
Limited Liability Company (LLC) ,
Member Removal ,
Membership Interest ,
Operating Agreements
Not for the first time, I find myself intrigued by the federal courts’ resistance to hearing state law claims for judicial dissolution of business entities where subject matter jurisdiction otherwise exists based on diversity...more
1/13/2020
/ Breach of Duty ,
Business Divorce ,
Business Entities ,
Business Litigation ,
Commercial Court ,
Commercial Leases ,
Common Law Claims ,
Contract Renewal ,
Damages ,
Derivative Suit ,
Dissolution ,
Fiduciary Duty ,
First Impression ,
Holding Companies ,
Investment ,
Judicial Dissolution ,
Nonprofits ,
Shareholder Litigation ,
Shareholder Rights ,
Shareholders ,
State Law Claims ,
Statutory Interpretation ,
Statutory Violations ,
Subject Matter Jurisdiction ,
Unjust Enrichment
In the end, it wasn’t much of a fight.
The case of Huggins v Scott, decided last month by Justice W. Franc Perry of the Manhattan Supreme Court, illustrates anew the well-nigh insurmountable hurdle faced by a minority...more
12/9/2019
/ Books & Records ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Contract Disputes ,
Fiduciary Duty ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Receivership
I’ve lost track of how many lawsuits I’ve seen between co-owners of New York City restaurants. It’s not surprising given the high percentage of restaurant failures in an intensely competitive market with high rents, high...more
12/2/2019
/ Books & Records ,
Business Assets ,
Business Litigation ,
Commercial Court ,
Contract Terms ,
Dismissals ,
Fraud Abuse and Waste ,
Intellectual Property Protection ,
IP License ,
Limited Liability Company (LLC) ,
Operating Agreements ,
Partnerships ,
Professional Misconduct ,
Restaurant Industry ,
Theft ,
Trademarks
In 2018, two members of a realty holding LLC sought judicial dissolution based on the death of one of the other members. The operating agreement defines a member’s death as an event of “Dissociation.”...more
11/18/2019
/ Appeals ,
Business Divorce ,
Business Litigation ,
Contract Disputes ,
Contract Negotiations ,
Contract Terms ,
Decedent Protection ,
Dismissals ,
Dissolution ,
Inheritance ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Property Valuation ,
Real Estate Market ,
Rental Property
330 West 85th Street is a prime location on Manhattan’s Upper West Side. At that address sits an elegant, pre-war, 48-unit rental apartment building known as The Rexmere. A 4th floor one-bedroom apartment currently is...more
In my business divorce travels occasionally I encounter instances in which shareholder distributions are made in the period between the valuation date for an elective buyout of a minority shareholder who sued for dissolution...more
The nationwide landscape of statutes and case law governing judicial dissolution of limited liability companies exhibits more state-to-state similarity than dissimilarity....more
9/23/2019
/ Business Divorce ,
Business Litigation ,
Buyouts ,
Capital Contributions ,
Contract Terms ,
Corporate Purpose ,
Dissolution ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Sale of Assets ,
Statutory Interpretation
Parking lots breed partnership disputes. I’ve litigated them and I’ve written about them, most notably the Kassab saga.
I suppose it’s the untapped development potential of parking lots, especially in flourishing downtown...more
It’s commonly said there are three things that matter with real estate: location, location, location. Likewise, three things matter when choosing a lawyer to set up a limited liability company: experience,...more
6/18/2019
/ Agribusiness ,
Business Divorce ,
Business Formation ,
Business Litigation ,
Business Partners ,
Dissolution ,
Family Businesses ,
Farms ,
K-1 ,
Legal Representatives ,
Limited Liability Company (LLC) ,
Operating Agreements ,
Transfer of Interest
I’ve long been intrigued with the frequency of litigation — especially in Delaware Chancery Court — over advancement of legal fees of a corporate director or officer or LLC manager who’s the target of a lawsuit by the entity...more
5/28/2019
/ Advancement ,
Business Divorce ,
Business Litigation ,
Commercial Court ,
Contract Terms ,
Corporate Dissolution ,
Corporate Officers ,
Directors ,
Indemnification ,
Indemnification Clauses ,
Legal Fees ,
Limited Liability Company (LLC) ,
Stock Options