In my experience, most operating agreements of New York LLCs include a provision barring amendments unless made in writing and executed by all members. Such provisions are especially prevalent with smaller, member-managed...more
Welcome to the 13th annual edition of Summer Shorts. This year’s edition features brief commentary on five recent decisions by New York courts in a variety of business divorce cases involving equitable contribution among...more
It’s been many years since our last pop quiz for all you business divorce aficionados. Time for another. See how many you get right before you read the answers...more
Someday, perhaps, I’ll find the comedic inspiration to come up with a joke that begins, “An LLC, a partnership, and a close corporation walk into a bar . . ..” Until then, I’ll have to satisfy myself with writing about an...more
Husband owns 99% membership of manager-managed LLC. Children own remaining 1%. Postnuptial agreement says husband’s “interest” in LLC goes to wife. LLC agreement says any transferee is not admitted as a member absent the...more
Notwithstanding that the pictured snow globe is the only snow I’ve seen in my neck of the woods this balmy winter, I’m pleased to present my annual Winter Case Notes collection of recent court decisions of interest....more
Since its legislative birthing in New York in 1994, the limited liability company has become the preferred choice of entity New York and across the country. Over the ensuing 15 years or so, New York’s lower courts struggled...more
I’m delighted to present our 15th annual list of the past year’s ten most significant business divorce cases.
This year’s list includes decisions by New York’s trial and appellate courts concerning a smorgasbord of...more
If there’s anything more contentious than a business divorce between co-owners of closely held firms, it’s a business divorce between a couple also going through or following a marital divorce....more
Let’s see how good you are at predicting the outcome and its rationale in a recently decided case involving the following facts:
The controller of a Delaware LLC has supermajority voting rights under the initial LLC...more
It’s a bit of a stretch to suggest that King Solomon prophesied the standard for judicial dissolution of LLCs, but there it is: under New York’s judicially construed standard for involuntary dissolution under Section 702 of...more
Our federal courts by and large are not hospitable to business divorce litigation. The two mainstays of the federal courts’ limited subject matter jurisdiction — federal question and diversity of citizenship — typically are...more
The statutes authorizing judicial dissolution of Delaware LLCs (LLC Act § 18-802) and New York LLCs (LLC Law § 702) essentially are the same: the petitioner must show that it is no longer “reasonably practicable” to carry on...more
What makes a partnership a partnership? What makes a partner a partner? To be clear, I’m referring to partners in a general partnership....more
The pictured architectural rendering of the sunlit Kings County Supreme Courthouse at 360 Adams Street, completed in 1957, doesn’t quite capture the reality of its dour, hulking presence in downtown Brooklyn. Its design...more
7/5/2022
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Corporate Waste ,
Derivative Suit ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Misappropriation ,
Ownership Interest ,
Shareholders ,
Standing
The current issue of The Business Lawyer, a quarterly publication of the ABA’s Business Law Section that rightly bills itself as “the premier business law journal in the country,” features a pair of dueling articles of great...more
Disputes over capital accounts and equity percentages are frequent fodder for business divorce litigation — especially in LLCs without operating agreements. Exemplars previously treated on this blog include Chiu v Chiu, an...more
6/6/2022
/ Aiding and Abetting ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Capital Contributions ,
Equity ,
Fiduciary Duty ,
Fraud ,
Limited Liability Company (LLC) ,
Loans ,
Negligent Misrepresentation
A limited partnership without a general partner cannot lawfully continue. That’s why it’s critical that the limited partnership agreement thoughtfully address general partner succession and, when triggered, the agreement’s...more
The New York Times yesterday published an article entitled Climate Change Enters the Therapy Room discussing persons suffering from “climate anxiety.” As a northeasterner, the frigid, snow-blessed, ground-freezing winter...more
2/7/2022
/ Business Divorce ,
Business Litigation ,
Business Ownership ,
Derivative Suit ,
Estoppel ,
Family Businesses ,
Inter Vivos Gifts ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Payroll Taxes
Are claims for judicial dissolution of business entities arbitrable? -
It’s a question I’m occasionally asked by business owners and, surprisingly, by lawyers. I say surprisingly because here in New York, the courts long...more
It’s been another year of important case law developments in business divorce controversies. I’m pleased to present my 14th annual list of the past year’s ten most significant cases....more
This episode features an interview with Professor Susan Pace Hamill, a leading authority and commentator on the origins and evolution of the limited liability company. We talk about her latest law review article entitled Some...more
For the second time in two years, the Connecticut Supreme Court has ventured into uncharted waters of LLC governance under the Revised Uniform LLC Act which, to date, has been adopted by 22 states and awaits legislative...more
11/22/2021
/ Books & Records ,
Business Divorce ,
Business Litigation ,
Closely Held Businesses ,
CT Supreme Court ,
Inspection Rights ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Minority Shareholders ,
RULLCA ,
Shareholder Oppression ,
Trust Distributions ,
Wealth Management
Appearances can be deceiving. -
That, essentially, was the argument made in two recently decided cases involving claims for judicial dissolution. ...more
11/15/2021
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Contract Terms ,
Employment Contract ,
Fraudulent Conveyance ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Purchase Price ,
Stock Transfer ,
Unjust Enrichment
Valuation discounts can and often do play an outsized role in contested appraisal proceedings involving the valuation of equity interests in closely held business entities for which there is no public market....more
11/1/2021
/ Appraisal ,
Business Divorce ,
Buyers ,
Buyouts ,
Closely Held Businesses ,
Dissolution ,
Fair Market Value ,
Fair Value Standard ,
Limited Liability Company (LLC) ,
RULLCA ,
Sellers