Much digital ink has been spilled on this blog and elsewhere (Tom Rutledge’s terrific article can be read) concerning the ability of LLC controllers to adopt or amend an operating agreement without the consent of all members....more
What’s a weaponized LLC? It’s one whose operating agreement gives the controlling majority members the authority to dilute, remove from management, or expel a non-controlling minority member, typically for failing to satisfy...more
C’mon, New York lawyers, do you really want to spend your time, your client’s money, and bother the court litigating a dead-end claim that your client rightfully expelled his or her LLC co-member for alleged misconduct,...more
In the judicial dissolution case that John (“Jake”) Feldmeier brought after resigning as the highly paid president of the family-owned business, the central issue over which he and his opposing siblings fought was whether the...more
Very few and very far between are cases in which the holder of a minority membership interest in a New York LLC — with or without a written operating agreement — prevails in an action brought under section 702 of the New York...more
The dog days of August are upon us, a perfect time as I do each year to offer vacationing readers some lighter fare consisting of summaries of a few recent decisions of interest involving disputes between business co-owners....more
8/13/2018
/ Appraisal ,
Business Divorce ,
Business Litigation ,
Business Valuations ,
Buy-Out Agreements ,
Co-Ownership ,
Contract Disputes ,
Contract Terms ,
Judicial Dissolution ,
Jurisdiction ,
NE Supreme Court ,
Partnership Agreements ,
Partnership Interests ,
Partnerships ,
Profit Sharing ,
Shareholders
Shareholders A and B are the sole shareholders of a real estate holding corporation. Their shareholders’ agreement includes provisions that...more
When three gentlemen in their mid-eighties, one of whom is in a nursing home with failing health and onset dementia, are the key players in a disputed shareholder buy-out transaction, what are the odds they’ll all be around...more
7/16/2018
/ Appeals ,
Breach of Duty ,
Business Divorce ,
Buy-Out Agreements ,
Fair Market Value ,
Fiduciary Duty ,
Fraudulent Concealment ,
Motion for Reconsideration ,
Motion to Dismiss ,
Partnership Interests ,
Partnerships ,
Real Estate Investments ,
Shareholder Litigation ,
Shareholders ,
Stock Sale Agreements ,
Stock Transfer ,
Summary Judgment
Three recent court decisions from three different states — New York, Pennsylvania, and Alabama — add to the rogue’s gallery of valuation cases stemming from poorly conceived and/or poorly implemented buy-sell agreements among...more
7/2/2018
/ AL Supreme Court ,
Asset Valuations ,
Business Divorce ,
Buy-Sell Agreements ,
Buyouts ,
Contract Terms ,
Fair Value Standard ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Shareholders
The hard-fought business divorce litigation between Nissim Kassab and his brother Avraham has provided plenty of fodder for this blog over the last several years with more to come, as evidenced by Queens County Supreme Court...more
Article 11 of the Business Corporation Law features multiple provisions giving judges broad authority and discretion to impose interim remedies designed to preserve corporate assets and otherwise to protect the petitioning...more
The Lowbet Realty saga, featuring the dissolution court’s rarely used authority to rescind an unauthorized sale of the corporation’s realty under Business Corporation Law § 1114, has finally ended after six years with a...more
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
The Nobel Prize symbolizes the apex of human achievement in the arts and sciences. It is no guarantee, however, that its recipients are equally adept when it comes to their own business endeavors....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
You know there’s something unusual going on in a case involving a dispute between co-members of an LLC — a form of business entity that didn’t exist in New York until 1994 — when the key legal precedents cited in the parties’...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
We call it deadlock dissolution when a 50% shareholder of a close corporation, who claims to be at an impasse with the other 50% shareholder, asks the court to dissolve and liquidate the corporation....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
In this episode of the Business Divorce Roundtable, Chris Mercer, one of the country’s leading business appraisers as well as a prolific author and frequent lecturer, shares what he calls “Confessions of a Reluctant Expert...more
2/9/2018
/ Business Divorce ,
Business Valuations ,
Court Appearances ,
Depositions ,
Divorce ,
Expert Reports ,
Expert Testimony ,
Expert Witness ,
Judges ,
Litigation Strategies ,
Valuation Experts ,
Witness Preparation
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
The steady flow and scholarly character of Delaware Chancery Court opinions in company valuation contests provide an important resource and learning tool for business divorce practitioners, appraisers, and judges in New York...more
This winter forever will be remembered in the Northeast as the winter of the “bomb cyclone,” which gets credit for the 6º temperature and bone-chilling winds howling outside as I write this. So in its honor, I’m accelerating...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