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Limited Liability Company (LLC) Business Divorce Closely Held Businesses

DarrowEverett LLP

Strong Operating Agreement Is Best Defense (and Offense) For Founders

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Founding a business with a partner is similar to getting married in many ways; it is a long-term commitment with your financial future and livelihood at stake. Unfortunately, business partners often stop getting along at...more

Farrell Fritz, P.C.

Fact Issues and Credibility Determinations on Injunction Motions

Farrell Fritz, P.C. on

Almost exactly one year ago, we wrote about the go-to line of New York case law for business divorce litigants hoping to secure injunctions: a substantial and ever growing body of authority holding that involuntary loss or...more

Farrell Fritz, P.C.

Conditional Grants of Membership Interests Are a Roadway to Courtroom Conflict

Farrell Fritz, P.C. on

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

Farrell Fritz, P.C.

Limo Company Shareholders Can’t Hitch a Ride in Derivative Litigation

Farrell Fritz, P.C. on

Closely-held business entities come in all shapes and sizes. By definition, under Partnership Law § 10, it takes “two or more” owners to form a general partnership. But corporations and LLCs have no such impediment, ranging...more

Farrell Fritz, P.C.

Surrogate’s Court Jurisdiction to Resolve Close Business Owner Disputes

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Do New York’s Surrogate’s Courts have jurisdiction to compel an accounting related to a non-party limited liability company in which the decedent’s estate has only a minority interest? ...more

Farrell Fritz, P.C.

Greetings from the American Bar Association’s 2023 LLC Institute

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Over its three-decade rise to the closely-held business entity of choice, the Limited Liability Company has won a special place in our hearts.  The majority of disputes we litigate and blog about concern ownership of or...more

Farrell Fritz, P.C.

Federal Courts Wade Into Business Divorce: Recent Decisions of Interest

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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

Farrell Fritz, P.C.

Warning: If You Want Legal Fee Advancement or Indemnification, You May Need to Amend Your Partnership, Shareholder, or Operating...

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The universe works in mysterious ways. Four days ago, when I sat down to write this article, my plan was to feature a decision from Manhattan Commercial Division Justice Andrea J. Masley denying dismissal of a closely-held...more

Farrell Fritz, P.C.

Anti-Dissolution Provisions and Public Policy

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In Congel v Malfitano, New York’s highest court wrote that business partners are free to include in partnership contracts practically “any agreement they wish,” including about “the means by which a partnership will dissolve,...more

Farrell Fritz, P.C.

General Partner’s Resignation Triggers Nonjudicial Dissolution of Limited Partnership

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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

Farrell Fritz, P.C.

The Nutmeg State Out Front on Member Inspection Rights Under RULLCA

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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

Farrell Fritz, P.C.

Statutory Buyouts and Discounts Under the Fair Market Value Standard: An Awkward Pair?

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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

Farrell Fritz, P.C.

Too Little, Too Late: Court Sides with Ousted Member, but Denies Preliminary Injunction Undoing Termination

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We often cover preliminary injunctions on the pages of this blog because they are a powerful tool in the business divorce litigator’s toolbox: they force court action early in the case, they can protect rights that are...more

Farrell Fritz, P.C.

The Doctrine of Tax Estoppel in Ownership Status Disputes

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Ownership status in a closely-held business is the first and most vital box almost every business divorce petitioner must check....more

Farrell Fritz, P.C.

The Money’s There But Out of Reach for the Minority LLC Member

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Of late I’ve been ruminating on New York’s membership in the shrinking pool of states that don’t recognize oppression of an LLC minority member by the controlling members or managers as ground for judicial dissolution....more

Farrell Fritz, P.C.

Who Decides Disputed Valuation Under LLC Agreement’s Buy-Out Provision: Arbitrator or Appraiser?

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It’s not unusual to find buy-out provisions in shareholder and operating agreements that commit the pricing of the buy-out to the “final and binding” determination of one or more appraisers. The same agreements also may...more

Farrell Fritz, P.C.

How to Resolve Competing Estate Plans of an LLC Owner with a Double Life

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Corporate shareholder and LLC operating agreements routinely contain provisions addressing the transfer of equity interests upon the death of an owner of a closely-held business. Such provisions are vital for succession...more

Farrell Fritz, P.C.

Bending the Rules of Standing: The De Facto Merger Doctrine

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Business Divorce 101: To be entitled to an accounting of a closely-held business, the plaintiff or petitioner must demonstrate the existence of a fiduciary relationship giving rise to a duty to account....more

Farrell Fritz, P.C.

Court Blocks “End Run” Around Bar to Subject Matter Jurisdiction in Suit to Dissolve Foreign LLC

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Many thousands of closely held corporations, limited liability companies, and limited partnerships formed under Delaware law (and, to a much lesser extent, other foreign states) make their home in New York....more

Farrell Fritz, P.C.

Court Appoints Interim Receiver for LLC, But at What Price?

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The limited liability company did not exist as a legally recognized business entity in New York when I first began handling business divorce cases in the 1980s. Decades later, the LLC is “King of the Hill,” having displaced...more

Farrell Fritz, P.C.

How to Initiate a Fair Value Appraisal Proceeding – a Dissenter’s Checklist

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Over the years, we’ve written a lot about limited partnership, corporation, and LLC “fair value” appraisal proceedings....more

Farrell Fritz, P.C.

Top Ten Business Divorce Cases of 2018

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I’m very pleased to present my 11th annual list of this past year’s ten most significant business divorce cases. This year’s list includes four important appellate decisions, including one likely to stand as a landmark...more

Farrell Fritz, P.C.

Accounting Unchained: Is the Closely Held Business Owner’s Right to an Accounting Absolute?

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Let’s face it. In business divorce, the accounting cause of action doesn’t get a lot of love. It’s not as sexy as the torts (conversion, breach of fiduciary duty, waste, etc). It lacks the oomph of judicial dissolution....more

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