News & Analysis as of

Business Divorce

Farrell Fritz, P.C.

Business Appraiser Liability? That’s a New One.

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We’ve written about accountant liability. We’ve written about bookkeeper liability. A carefully crafted complaint can state viable claims for either. But business appraiser liability?...more

Patton Sullivan Brodehl LLP

LLCs Can Assert Offensive Claims Against Members

In “business divorce” litigation involving LLCs, it is common to see a disgruntled LLC member asserting claims against the LLC’s manager. Depending on the type of harm alleged, those claims might be asserted directly (by the...more

Offit Kurman

How Buy-Sell Agreements Can Help Prevent a Messy Business Divorce

Offit Kurman on

Just like any kind of relationship, not all business partnerships are built to stand the test of time. They can sour just as easily as a romantic partnership or friendship as vision and long-term goals diverge, financial...more

Bradley Arant Boult Cummings LLP

Seeking a Revenge Premium in Business Divorce: Resisting the Urge to Plunge Headfirst Into Quicksand

When longtime business partners in private companies go through a business divorce, emotions often run high. One or both of the partners may be seeking a “revenge premium” in the business divorce process based on their...more

Farrell Fritz, P.C.

LLC Member States Direct Claims Arising from Machiavellian Manager’s Tactical Bankruptcy Petition

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“There is only going to be one winner here, and it’s not going to be you—give in while there is something still left in it for you,” said one LLC member to the other. With co-owners like that, who needs enemies?...more

Bradley Arant Boult Cummings LLP

Splitting the Pie Fairly: Using Creativity to Achieve a Successful Business Divorce

Throwing the baby out with the bath water is a pithy expression that suggests exercising caution when business partners in private companies are seeking to achieve a business divorce. The majority owner and the departing...more

Farrell Fritz, P.C.

Winter Case Notes: Nice Try, But the Agreements Say What They Say

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Spring is soon upon us. March Madness is at our doorstep. The Formula 1 season is underway. Baseball season will be in full swing shortly. And my allergies are already in bloom....more

Offit Kurman

Building and Exiting Business Partnerships

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Join attorneys Sarah Sawyer and Russell Berger from Offit Kurman as they discuss the dynamics of business relationships. In this episode of OK at Work, they explore the importance of proactive planning in partnerships, the...more

Farrell Fritz, P.C.

No Unforced Errors Please: “For Cause” Removal Provisions Mean What They Say and Say What They Mean

Farrell Fritz, P.C. on

Not long ago, we wrote about the vital need for strict compliance with contractual options to buy or sell closely-held business equity interests. As we noted then, failure to strictly comply with any contractual conditions...more

Bradley Arant Boult Cummings LLP

Majority Owners Achieving Balance: Incentivizing Employees Without Giving Up the Keys to the Whole Kingdom

Success is not just an elusive goal – it can also be difficult to maintain once achieved. For majority owners in private companies, achieving success is just the first hurdle, because once they arrive at this pinnacle, they...more

Bradley Arant Boult Cummings LLP

The Risks of 50-50 Owned Business Partnerships: This Marriage of Equals Does Not Guarantee Success

During Valentine’s Day month, we are taking a look at 50-50 owned private businesses. Forming a co-owned company may sound like a good idea on paper because the two partners are close friends or family members who are making...more

DarrowEverett LLP

Florida Divorce Ruling on Personal Goodwill Could Impact Other States

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In early July 2024, Florida enacted a significant amendment to its equitable distribution statute, particularly concerning the treatment of personal goodwill in divorce proceedings. These changes, coupled with the pivotal...more

Bradley Arant Boult Cummings LLP

I’ll Cry if I Want To – But Taking Steps to Avoid Tears Is a Better Strategy for Private Company Business Partners

In recent years, the headlines have tracked the news of high-profile breakups among business partners in private companies. These business partner fallouts include: - 2023: Sam Altman was ousted as Open AI CEO (for...more

Farrell Fritz, P.C.

Can a Shareholder Be Oppressed After Ceding Control? Oppression, Reasonable Expectations, and Contractual Formalism

Farrell Fritz, P.C. on

One of the first business divorce cases that I participated in as a young litigator was a lengthy arbitration over whether a minority shareholder was oppressed under BCL 1104-a.  With those fond memories, evolution of the...more

Stradling Yocca Carlson & Rauth

California Business Divorce: Partner Fraud and Personal Liability - Important Lessons from Bartenwerfer v. Buckley

The Story Behind the Case - Kate and David Bartenwerfer started their business with a straightforward plan. The couple decided to renovate and sell a house they jointly owned in San Francisco. David handled the remodeling...more

Farrell Fritz, P.C.

Top 10 Business Divorce Cases of 2024

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Welcome to our 17th annual edition of the Top 10 business divorce cases featured on this blog over the past year. This year’s selections buck the trend of previous years in which cases involving limited liability...more

Farrell Fritz, P.C.

Check Your Footing: $36 Million Money Judgment Eviscerated in Brutal Appellate Standing Loss

Farrell Fritz, P.C. on

To prevail on a cause of action in a business divorce lawsuit, the plaintiff has many essential boxes to check. Pleading requirements vary from one claim to another, but all business divorce cases have one thing in common....more

Farrell Fritz, P.C.

When Less Effort Leads to More Trouble: Quiet Quitting and Fiduciary Accountability

Farrell Fritz, P.C. on

We frequently see a partner’s “fiduciary duties” expressed as the union of the duty of loyalty and the duty of care.  The duty of loyalty requires fiduciaries to avoid elevating the interests of any other person or entity...more

Farrell Fritz, P.C.

To be or Not to Be (a Member). That is the Question… That Estoppel Can Help Answer.

Farrell Fritz, P.C. on

Evidence of ownership. Necessary in business divorce. Not always so easy to prove. Today’s case— Xiaoyan Lu v Sagewood SFF III LLC, 2024 NY Slip Op 05895 (1st Dept 2024)—gives an example of how far (or not) the doctrines of...more

Farrell Fritz, P.C.

Fact Issues and Credibility Determinations on Injunction Motions

Farrell Fritz, P.C. on

Almost exactly one year ago, we wrote about the go-to line of New York case law for business divorce litigants hoping to secure injunctions: a substantial and ever growing body of authority holding that involuntary loss or...more

Farrell Fritz, P.C.

A Leaf Through a Busy November in New York LLC Litigation

Farrell Fritz, P.C. on

November was a whirlwind month for New York LLC litigation.  It featured disputes over how to wind up a judicially dissolved LLC, a bitter intra-family emergency indemnification/advancement injunction, and the finale of a...more

Farrell Fritz, P.C.

Diving Into the Shallow Waters of New York Law Permitting Elimination of LLC Managers' Liability for Breach of Fiduciary Duty

Farrell Fritz, P.C. on

There’s a ton of Delaware caselaw enforcing Section 18-1101 (c) of that state’s LLC Act as amended in 2004, authorizing LLC agreements to eliminate the members’ and managers’ liability for breach of fiduciary duty, the only...more

Farrell Fritz, P.C.

Diving Into the Shallow Waters of New York Law Permitting Elimination of LLC Managers’ Liability for Breach of Fiduciary Duty

Farrell Fritz, P.C. on

There’s a ton of Delaware caselaw enforcing Section 18-1101 (c) of that state’s LLC Act as amended in 2004, authorizing LLC agreements to eliminate the members’ and managers’ liability for breach of fiduciary duty, the only...more

Miles Mediation & Arbitration

Business Breakups: Why Business and Commercial Cases Are Well-Suited to Mediation

Breaking up is hard to do, as the old song says, and perhaps especially so in the case of partnership breakups and business disputes. Emotion and pride can easily cloud sound business judgment and make it difficult to reach a...more

Stradling Yocca Carlson & Rauth

California Business Divorce: The Power of LLC Members to Ratify Past Actions Despite Defective Meeting Notices

Here’s What Happened This dispute arose from the operations of 409 North Camden, LLC, which owns a two-story office building in Beverly Hills. The property's history dates back to 1963, when six friends purchased it as...more

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