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
What makes someone a member of an LLC?
It’s a question that frequently arises in business divorce cases involving LLCs that have no written operating agreement much less certificated membership interests. ...more
LLC enabling statutes authorize two types of management structures. The default structure is member-managed in which all members participate in the management of the company’s business affairs. Member-managed LLCs usually...more
It’s that time of year again, when I offer some lighter fare for poolside consumption consisting of summaries of a few recent decisions of interest involving disputes between business co-owners....more
8/12/2019
/ Breach of Duty ,
Business Divorce ,
Buyouts ,
Contract Terms ,
Dissolution ,
Fiduciary Duty ,
Legal Representatives ,
Limited Liability Company (LLC) ,
Limited Partnerships ,
Minority Shareholders ,
Non-Reliance Clauses ,
Pass-Through Entities ,
Settlement Agreements ,
Shareholder Litigation ,
Shareholder Oppression
Many thousands of closely held corporations, limited liability companies, and limited partnerships formed under Delaware law (and, to a much lesser extent, other foreign states) make their home in New York....more
Last week’s post examined an unusual case in which the court appointed a temporary receiver of an LLC pending the adjudication of the minority members’ petition for judicial dissolution....more
The limited liability company did not exist as a legally recognized business entity in New York when I first began handling business divorce cases in the 1980s. Decades later, the LLC is “King of the Hill,” having displaced...more
Business divorce cases more often than not include claims against the controlling owners for diversion or waste of company assets, usurpation of corporate opportunity, taking excessive compensation and the like. The party...more
Normally you don’t associate the lucrative sale of a closely held business with bitter disputes among the co-owners leading to judicial dissolution proceedings. When the cake is big enough, the thinking goes, each owner walks...more
6/24/2019
/ Business Ownership ,
Business Succession ,
Business Transfer Agreements ,
Closely Held Businesses ,
Family Businesses ,
Forum Selection ,
Judicial Dissolution ,
Post-Closing Rights ,
Selling a Business ,
Stock Ownership ,
Succession Planning
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
If you’re a member of a multi-member LLC, and especially if it’s manager-managed, here’s a reason you might want to check under the hood of your LLC agreement: if the business goes belly up amidst squabbling or worse among...more
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
This is the story of a deadlock resolution provision that backfired. It is a long story — 94 pages long to be exact. That is the length of Chancellor Bouchard’s characteristically detailed and thorough post-trial opinion...more
5/20/2019
/ Business Divorce ,
Contract Terms ,
Corporate Deadlock ,
Delaware Limited Liability Company Act ,
Dissolution ,
Limited Liability Company (LLC) ,
Opioid ,
Pain Management ,
Pharmaceutical Industry ,
Prescription Drugs ,
Startups
Tax issues always have been an integral factor in valuing closely held business entities, whether for purposes of a court-supervised buyout or otherwise. The Tax Reform Act of 2018 added an important, new deduction for...more
“I will not seek or accept an award in excess of $74,999.99, inclusive of punitive damages, attorney’s fees and the fair value of any injunctive relief.”...more
As it approaches its sixth anniversary with little sign of letting up, the highly contentious litigation between brothers and business partners NIssim and Avraham Kassab is the gift that keeps on giving, at least to us...more
Most judicial dissolution cases in New York courts involve a single entity. When the target of dissolution is structured as a holding company for one or more operating or asset-based companies with asymmetric management, the...more
The discoverability of materials in civil litigation in general resists any hard and fast rules, other than that the scope of discovery is broadly defined and liberally applied under the rules of civil procedure in both state...more
When 50/50 co-owners of a business are deadlocked on a major business decision, unless they have a written agreement that dictates a buy-sell process or appoints a “third director,” the unresolved deadlock may lead to...more
When it comes to business valuation principles in contested appraisal proceedings, I’d say the 50 states have far more in common than separates them. Certainly this is true in cases applying the fair market value standard...more
The litigation arsenal of business divorce lawyers contains weapons of varying firepower. The choice of weapon for any particular assignment will depend on many factors including the type and size of the business; whether the...more
Notwithstanding we’ve had no more than a dusting of snow thus far in my downstate New York neck of the woods, welcome to another edition of Winter Case Notes in which I visit my backlog of recent court decisions of interest...more
2/11/2019
/ Advancement ,
Arbitration ,
Books & Records ,
Business Divorce ,
Family Businesses ,
Indemnification ,
Limited Liability Company (LLC) ,
Membership Interest ,
Minority Shareholders ,
Shareholder Litigation ,
Shareholder Oppression ,
Statute of Limitations
What’s become known as the bad-faith petitioner defense in judicial dissolution proceedings first emerged in Matter of Kemp & Beatley, 64 NY2d 63 [1984]...more