It is no secret by now that remote proceedings are here to stay. Driven at first by the safety protocols related to the COVID-19 pandemic, remote proceedings have outlived those protocols, and they remain the preferred forum...more
11/10/2022
/ Business Litigation ,
Comment Period ,
Commercial Court ,
Depositions ,
Evidence ,
Judicial Proceedings ,
Litigation Strategies ,
New York ,
Public Comment ,
Remote Proceedings ,
Rules of Court
One of the earliest signs that a closely-held business is headed for divorce lies in how its owners treat new opportunities. When the relationship among the owners reaches a certain level of distrust, an owner presented with...more
New York’s default rules regarding LLC members’ rights to transfer their interests appear in sections 603 and 604 of the LLC Law. Section 603 provides that a membership interest is fully assignable, but the assignee does not...more
9/19/2022
/ Acquiescence ,
Business Divorce ,
Business Litigation ,
Contract Terms ,
Default ,
Equitable Defenses ,
Limited Liability Company (LLC) ,
Loans ,
Membership Interest ,
Operating Agreements ,
Transfer of Interest ,
Void ab initio
Nestled between Broadway and Church Street in New York City’s hottest neighborhood is the landmarked, stone-façade building at 66-68 Reade Street. Now marketed as the superluxury boutique condominium complex 66 Reade, the...more
8/22/2022
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Buy-Sell Agreements ,
Capital Calls ,
Fiduciary Duty ,
Fraudulent Inducement ,
Operating Agreements ,
Real Estate Development ,
Self-Dealing
Litigation in the Commercial Division is efficient and effective in part because its judges strictly enforce the Commercial Division Rules. Those unsure can peruse Matt Donovan’s “Check the Rules” series on this blog,...more
Some of the most complex and hotly-contested business divorce litigation arises from the dissolution of law firms. Perhaps law firm dissolutions are prone to litigation because many are organized as partnerships or LLPs, and...more
7/11/2022
/ Business Disputes ,
Business Divorce ,
Business Litigation ,
Collateral Estoppel ,
Contingency Fees ,
Corporate Dissolution ,
Judicial Estoppel ,
Law Firm Ownership ,
Limited Liability Partnerships ,
Partnership Agreements ,
Partnerships
As we approach the 30th Anniversary of New York’s Commercial Division, it’s fair to say that over those 30 years, the Commercial Division has held true to its aim of improving the efficiency and judicial treatment of complex...more
I can’t say what the number is, but my own experience tells me that a significant percentage of lawsuits by a minority owner of a closely-held company against those in control of the company include a demand for an...more
3/21/2022
/ Accounting ,
Books & Records ,
Breach of Contract ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Derivative Suit ,
Fiduciary Duty ,
Minority Shareholders ,
Operating Agreements ,
Shareholder Distributions
Two principles often guide courts’ interpretation and enforcement of contracts. First, courts respect parties’ freedom of contract, mostly. So long as an agreement is not illegal or violative of a strong public policy,...more
“Except as provided in the operating agreement. . . ” -
By my count, this phrase and its close relative, “unless otherwise provided in the operating agreement,” appear 59 times in New York’s LLC Law, most often to...more
We often cover preliminary injunctions on the pages of this blog because they are a powerful tool in the business divorce litigator’s toolbox: they force court action early in the case, they can protect rights that are...more
10/18/2021
/ Business Divorce ,
Business Litigation ,
Closely Held Businesses ,
Contract Terms ,
Limited Liability Company (LLC) ,
Membership Interest ,
Motion To Enjoin ,
Operating Agreements ,
Preliminary Injunctions ,
Reorganizations ,
Right of Reinstatement ,
Termination Rights
In March 2020, the New York State Courts and attorneys’ offices all over the state shut down as part of the public’s broad effort to slow the spread of the Coronavirus, and the legal profession quickly transitioned to remote...more
Business divorce has a way of drawing quick and often lopsided battle lines. Many disputes in closely-held companies feature one outspoken owner feuding with a united group of the remaining owners over management or...more
The right of shareholders to elect a corporation’s directors is one of the most valuable rights attendant to share ownership. Election of directors is where shareholders can directly exert their influence on the corporation,...more
7/26/2021
/ Board of Directors ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Closely Held Businesses ,
Corporate Governance ,
Director Nominations ,
Director Removal ,
Fine Art ,
Injunctions ,
Likelihood of Success ,
Minority Shareholders ,
Motion To Enjoin ,
Shareholder Meetings ,
Shareholders ,
Voting Rights
The New York Commercial Division was created in 1993 “to test whether it would be possible, by concentrating on commercial litigation, to improve the efficiency with which such matters were addressed by the court and, at the...more
BCL 626 governs shareholder derivative actions, or suits brought by individual shareholders on behalf of, and for injury to, the corporation. Subsection (e) provides that if the plaintiff—the individual shareholder asserting...more
A minority shareholder petitioning for dissolution under BCL § 1104-a must establish, by a preponderance of the evidence, that the majority shareholders have engaged in “illegal, fraudulent or oppressive actions,” (BCL §...more
A familiar fact pattern: ParentCo is the owner and controlling shareholder of SubCo. ParentCo completely controls SubCo. The two companies have the same officers, issue consolidated financial returns, and the profits and...more
It works the same way in small businesses as it does in major investment firms: the executives reach agreement on the terms of a deal, then leave the lawyers to paper things accordingly....more
As we continue to see increased litigation over electronic programs, apps, and algorithms, courts are increasingly called to consider discovery requests for the coding behind that technology. These requests highlight the...more
1/30/2020
/ Algorithmic Trading ,
Breach of Contract ,
Business Litigation ,
Coding ,
Commercial Court ,
Confidentiality Agreements ,
Counterclaims ,
Defamation ,
Discovery ,
Discovery Disputes ,
High Frequency Trading ,
Joint Venture ,
Litigation Strategies ,
Non-Disclosure Agreement ,
Proprietary Information ,
Reversal ,
Securities Transactions ,
Trading Platforms