It’s difficult to assess the potency of section 417(a) of New York’s LLC law. The provision starts off with a seemingly broad rule: “The operating agreement may set forth a provision eliminating or limiting the personal...more
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
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
“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
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
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
1/13/2025
/ Arbitration ,
Board of Directors ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Contract Terms ,
Corporate Governance ,
Fiduciary Duty ,
Minority Shareholders ,
Shareholder Litigation ,
Shareholder Oppression ,
Shareholders ,
Summary Judgment
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
The shareholder oppression claim under BCL 1104-a has a unique relationship with claims for money damages.
A minority shareholder petitioning for dissolution under BCL 1104-a must establish that the majority shareholders...more
It’s not every day that New York’s highest court considers a question impacting the business divorce cases that we typically litigate. And even when an interesting business divorce issue does make its way up to Albany, it’s...more
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
When a closely-held business is profitable, self-interested owners naturally want a bigger slice of the pie, especially where the personal relationships among the owners are frayed. Perhaps that’s why we often discuss the...more
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
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
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
One of the earliest signs that a closely-held business is headed for divorce lies in how its owners treat new opportunities. When the relationship among the owners reaches a certain level of distrust, an owner presented with...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
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
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