Resolving ownership disputes with a buyout at auction has a tempting simplicity. The buyout gives the owners the divorce they need. And the auction—particularly a blind auction, in which no owner is aware of the other’s...more
When a minority shareholder petitions for dissolution of a corporation on the grounds of oppressive or illegal conduct (see BCL 1104-a), Section 1118 of New York’s Business Corporation Law allows the corporation or any other...more
In 1941, two of the three shareholders of Ringling Bros.-Barnum & Bailey Combined Shows, Inc. entered into an agreement stating that they would vote their combined 630 of the outstanding 1000 shares of Ringling Bros. stock...more
4/10/2023
/ Board of Directors ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Contract Terms ,
Corporate Governance ,
Director Nominations ,
Limited Liability Company (LLC) ,
Private Right of Action ,
Shareholders ,
Voting Rights
This blog frequently covers cases considering a shareholder’s request to dissolve a corporation under New York’s oppression-based corporate dissolution statute, BCL 1104-a. That statute allows a shareholder to petition for...more
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
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
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
The books and records proceeding often is the first time that a dispute between a minority shareholder and the majority enters the courtroom. Suspicious of misconduct or mismanagement, the minority shareholder demands to...more
1/10/2022
/ Books & Records ,
Business Disputes ,
Business Divorce ,
Corporate Misconduct ,
Fair Valuation ,
Financial Statements ,
Inspection Rights ,
Shareholder Litigation ,
Shareholders ,
Stocks ,
Tax Returns
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
Under both New York and Delaware law, members of an LLC may petition for judicial dissolution on the grounds that the management is so hopelessly deadlocked that the LLC can no longer function in accordance with its purpose...more
One of the more attractive features of LLCs as a business organization is that they are, in large part, creatures of contract. Most provisions in the NY LLC Law are default rules, and members are free to adopt those or...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