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Beyond Fair Value: When Shareholder Oppression Demands Interest and Damages

Shareholder oppression has long been a favorite topic of mine—for good reason.  A cornerstone of business divorce litigation, a claim of minority shareholder oppression under BCL 1104-a often invites creative argument over...more

Demand Futility, Dissolution, and Transfer Restrictions: Spring Blooms Fresh Developments in LLC Litigation

In addition to blooming trees and longer days, spring in New York has ushered in a fresh crop of noteworthy decisions on intra-LLC disputes.  Headliners include a boost to members’ rights to compel an accounting courtesy of...more

Stated Purpose vs. Stated Problem: Court Sticks to the Script for LLC Dissolution

It’s been 15 years since the Second Department’s decision in Matter of 1545 Ocean Avenue, LLC, 72 AD3d 121, 2010 NY Slip Op 00688 (2d Dept Jan. 26, 2010), which established the standard for judicial dissolution of limited...more

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

“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

Affiliated Entities, Conflicting Duties, and the Business Judgment Rule

I am increasingly encountering businesses that straddle across several different entities, especially LLCs. The popularity of LLCs, their relatively low cost of organization, and business owners’ apparent desire to...more

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

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

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

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

A Leaf Through a Busy November in New York LLC Litigation

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

Conditional Grants of Membership Interests Are a Roadway to Courtroom Conflict

In the world of business divorce litigation, this summer saw everything but a slowdown.  We witnessed (and blogged about) Justice Crane cap a long-running fair value proceeding with helpful guidance on appraisals and...more

When Law Firms Break Bad: The Valuation Battle Over Contingency Fees and Crypto Tokens

As both a practitioner and a close follower of New York business divorce caselaw, I’ve seen a recent uptick in disputes centered on the breakup of professional services firms and cryptocurrency businesses. Perhaps the crypto...more

Your Business Appraiser Relied on What!? Lessons from a Mostly-Decided Motion to Preclude

One of the best parts of being a business litigator is the frequent opportunity it affords to work with (and against) expert witnesses of all stripes. And perhaps because there are so many ways that a business divorce can...more

Your Business Appraiser Relied on What!?  Lessons from a Mostly-Decided Motion to Preclude

One of the best parts of being a business litigator is the frequent opportunity it affords to work with (and against) expert witnesses of all stripes. And perhaps because there are so many ways that a business divorce can...more

Termination, Adequate Alternative Remedies Sends Dissolution Proceeding Packing

There are plenty of advantages to practicing business divorce litigation in New York.  The diversity of businesses and clients, complexity of agreements and transactions, and excellence of judges and attorneys make New York,...more

The Legal Ramen-ifications of Dissolving a New York LLC Over Noodle Choices

The last time we featured a notable decision on a claim for dissolution of a restaurant-operating LLC was in 2017, with a post by Frank McRoberts titled, “LLC’s Purpose Being Achieved?  Business Doing Fine?  Good Luck Getting...more

And the Award for Most Creative Attempt to Evade a Book Value Buy-Sell Provision Goes To . . .

“Under any standard of value, the true economic value of a business enterprise will equal the company’s accounting book value only by coincidence . . .” says the late business valuation expert and author Shannon Pratt.  So...more

The First State Defines the Scope of Majority Shareholder Fiduciary Duties

More often than not, the centerpiece of an intra-owner business dispute is a claim that those in control of the business breached their fiduciary duties to the company or the minority owners.  While often easy to assert, the...more

Ambiguous Agreement, Clear Consequences

This first post of 2024 brings the New York Business Divorce Blog into its eighteenth calendar year of weekly commentary on disputes among co-owners of closely held businesses. This year, let business owners and their...more

A Lifeline for the Stale “Schedule A”

One need not peruse the pages of this blog for long to learn that its authors strongly advise against entering into an owners’ agreement that calls on the members to “annually” (or worse, “regularly”) update a critical aspect...more

Proceed with Caution: Strategy Considerations Before Making a Books and Records Demand

The books and records demand often is the opening act in business divorce litigation. The relatively low burden that an owner must meet in order to obtain access to a company’s books and records, and the availability of an...more

How to Stop a Cash-Out Merger from Cancelling Your Shares

The corporation of which you are a shareholder just sent you notice that it plans to merge with another corporation.  And although the other existing shareholders will have their shares exchanged for shares of the new...more

Dissolution Defined: The First Department’s Recent Guidance on Interpreting Operating Agreements

The owners’ agreement is the backbone of the closely-held business.  In intracompany LLC disputes, few things are more important than what the operating agreement has to say on the subject.  As a consequence, the pages of...more

Derivative into Direct and Waived into Preserved: The Transformative Power of the Implied Covenant of Good Faith and Fair Dealing

The distinction between direct and derivative claims pervades business divorce litigation.  Whether a dissident owner’s claim against his or her co-owners is a direct claim (one that the owner can assert in their individual...more

Strength in Numbers: The Resurgence of the Accounting Claim in Business Divorce Litigation

At the beginning of last year, I wrote a eulogy for the equitable accounting cause of action in business disputes: But What of the Equitable Accounting?  The gist was that perhaps due to its potential potency, and certainly...more

Clash of Valuation Visions: Appraisal Proceeding Over Manhattan Eyeglass Shop Goes the Distance

The authors of this blog have a special affinity for fair value appraisal proceedings.  The narrow hearings—where the sole issue before the court is the fair value of an owner’s interest in a business—require attorneys and...more

At-Will Employment Agreement Plus Mandatory Redemption Clause Leaves Minority Shareholder-Employees Out in the Cold

MiniCorp has five shareholders, all of whom are employees.  Each shareholder’s employment agreement states that they are an at-will employee of MiniCorp, and the shareholders agreement provides that when a shareholder’s...more

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