A New York LLC with a broad, “purposeless” purpose clause and demonstrated financial sustainability is dissolved over . . . the minority owner’s disagreement with the menu?
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New York Appellate Court’s Split Decision Involving Delaware LLC Pits “Harsh” Contractarianism Against “Fundamental Fairness”
In a split 3-2 decision last week, the Appellate Division, First Department, affirmed an order dismissing a claim to enforce an oral buy-out agreement involving a Delaware LLC as barred by the merger clause in a subsequently amended operating agreement…
Rare as a Dodo: Bifurcation in Business Divorce Trials
In this week’s New York Business Divorce, read about an exceptionally rare find: a bifurcated jury trial in a business divorce dispute.…
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 why do so…
Enforcing the Guardrails on Transactions Involving Interested Directors of Close Corporations
This week’s New York Business Divorce takes a look at the common-law history leading to the enactment of BCL 713 regulating self-interested transactions by corporate directors, along with illustrative synopses of cases applying the statute.…
The Flexible “For Cause” Standard for Director and Officer Removal
In this week’s New York Business Divorce, we consider a first-in-a-generation appeals court decision affirming a lower court’s removal of a corporate officer “for cause.”…
The First State Defines the Scope of Majority Shareholder Fiduciary Duties
This week’s post takes us to the halls of Delaware Chancery Court, where a recent decision from Vice Chancellor Laster offers a first-of-its-kind roadmap for assessing the fiduciary duties owed by a majority shareholder.…
The Perils of Indeterminate LLC Membership Interests, Redux
This week’s New York Business Divorce revisits the issue of indeterminate LLC membership interests and the resulting disputes that can arise when not properly addressed in the operating agreement.…
Direct to Beneficial: Change of Corporate Ownership Structure Yields No Right to Dissent and Seek Appraisal
When a corporation disposes of “all or substantially all” assets, shareholders opposed to the transaction are entitled to dissent and demand fair value for their shares in an appraisal proceeding. Does a corporation’s transfer of its assets to another entity…
Let’s Talk About Dilution
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 value of freeze-out mergers as a mechanism…