Mediation, as commonly understood in the context of alternative dispute resolution, employs a neutral third party to facilitate negotiation and voluntary agreement between the parties. Unlike arbitration, the mediator does...more
Transactional lawyers who assist clients in the formation and restructuring of business entities, and the litigators who clean up the transactional lawyers’ occasional messes, each have lessons to learn from last week’s...more
Recently, in two separate cases, two New York judges construing two LLC agreements of two LLCs formed under the laws of two different states — Delaware and Nevada — came to the same conclusion when faced with the same...more
Unlike the LLC statutes in many other states, New York’s LLC Law does not authorize the LLC or any of its members to seek judicial expulsion of another member, no matter how egregious the member’s behavior. As the Appellate...more
In the annals of business divorce litigation and assorted other disputes between co-owners of closely held business entities, the cause of action for breach of the implied covenant of good faith and fair dealing likely wins...more
The test for judicial dissolution of LLCs under LLC Law § 702, as laid down in 1545 Ocean Avenue, initially asks whether the managers are unable or unwilling to reasonably permit or promote realization of the LLC’s “stated...more
I’m delighted to present my 10th annual list of this past year’s ten most significant business divorce cases.
This year’s list includes seven noteworthy appellate decisions, two of which — Mace v Tunick and Shapiro v...more
When the tsunami of LLC enabling statutes swept the U.S. in the late ’80s and early ’90s, including New York in 1994, many included a default rule authorizing as-of-right member withdrawal and payment for the “fair value” of...more
12/11/2017
/ Appeals ,
Breach of Duty ,
Buyouts ,
Commercial Property Owners ,
Declaratory Judgments ,
Derivative Suit ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Transfer of Interest
I wish I could take credit for it, but I can’t. The phrase “bare naked assignee” was coined by the preeminent scholar and LLC maven Professor Daniel Kleinberger whose massive oeuvre (not to mention his guest posts on this...more
I’ve said it before, I’ll say it again: for professionals who dwell in the world of LLCs, whether as transactional, tax, or litigation counsel, attending the annual, two-day LLC Institute, sponsored by the LLCs, Partnerships...more
Having read thousands of court opinions during my 30+ years as a litigator, I’ve learned to assume that there are things going on beyond what can be gleaned from the court’s written decision, and that these hidden factors may...more
The practical lesson for entrepreneurs of the case I’m about to describe is, never sign complex business agreements without your lawyer, and never ever sign such agreements in the last week of August when your vacationing...more
This is the first in what I hope will be a recurring feature of this podcast featuring war stories told by business divorce professionals. In this episode we hear stories from business appraiser Tony Cotrupe (Meliora...more
9/8/2017
/ Appraisal ,
Business Divorce ,
Business Ownership ,
Buyers ,
Buyouts ,
C-Corporation ,
Comment Period ,
Corporate Dissolution ,
Division of Assets ,
Fair Market Value ,
Forensic Examination ,
Limited Liability Company (LLC) ,
Operating Agreements ,
Sellers ,
Valuation
Regular readers of this blog know it’s been anything but summer doldrums in the world of business divorce, what with case law developments such as the Appellate Division’s potentially far-reaching ruling on the purposeless...more
WARNING: Contractarians may find the following post disturbing. Reader discretion is advised.
Now that I’ve got your attention, consider this:
Under the standard for judicial dissolution of a New York LLC prescribed in...more
In 1981, three partners formed a general partnership to own and operate a rental property. Their partnership agreement fixed a 30-year term, to 2011. In 2003, the partners formed a new LLC maintaining the same ownership...more
A little over three years ago I reported on the first round of a fascinating “food fight” among four siblings, each of whom is a 25% shareholder of a Brooklyn-based, second-generation food distributor known as Jersey Lynne...more
The common perception among practitioners familiar with the business entity laws of New York and Delaware is that Delaware law generally is friendlier to, and more protective of, majority ownership and management interests....more
The rules of “standing” in business divorce litigation generally require that the plaintiff have an ownership interest in the business entity at the time of the alleged wrongful conduct and, for derivative claims brought on...more
It’s true that the statutory and common-law rules at play in business divorce cases can vary widely from state to state. But it’s also true that court decisions in one state can influence courts in other states, and can...more
A huge percentage of limited liability companies consist of two co-equal, 50% members, which poses the danger of management deadlock and dysfunction leading to dissolution or other litigation. In this episode, you'll hear my...more
I can count on one hand the number of federal court cases I’ve featured on this blog since I started it almost 10 years ago — and that’s no coincidence....more
Expulsion a/k/a dissociation of an LLC member is a hot-button topic whether it’s pursuant to the terms of an operating agreement or by court order. This episode of the Business Divorce Roundtable features an interview with...more
An appellate decision last week sounds alarm bells for minority members of New York LLCs that have no operating agreement and for anyone considering becoming a minority member of an LLC without first having in place an...more
Oh, the things that can happen when the LLC members identified in the company’s operating agreement differ from those identified in official documents submitted to government agencies....more