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Most judicial dissolution cases in New York courts involve a single entity. When the target of dissolution is structured as a holding company for one or more operating or asset-based companies with asymmetric management, the issues can get hairier. Case in point: Brooklyn Commercial Division Justice Lawrence Knipel’s recent decision in Matter of Lev v Rosenberg, 2019 NY Slip Op 30824(U) [Sup Ct Kings County Mar. 13, 2019]. I’ll get to the mulligan in a bit. The Lev case pits two co-owners…
The discoverability of materials in civil litigation in general resists any hard and fast rules, other than that the scope of discovery is broadly defined and liberally applied under the rules of civil procedure in both state and federal cases, and that judges are afforded broad discretion in deciding what’s “material and necessary” (NY CPLR 3101 (a)) or “relevant” (Fed.R.Civ.P. 26 (b) (1)) based on the specific facts and issues in each case. In contested stock valuations triggered by elections to purchase in statutory dissolution or dissenting shareholder cases, it’s…
When 50/50 co-owners of a business are deadlocked on a major business decision, unless they have a written agreement in which a declared deadlock triggers a buy-sell process or appointment of a specific third person to cast a deciding vote, the unresolved deadlock may lead to litigation or even dissolution of the business entity. In many instances deadlock is not the cause of a dysfunctional relationship between the 50/50 owners but, rather, is symptomatic of an irreconcilable breakdown of their personal…
When it comes to business valuation principles in contested appraisal proceedings, I’d say the 50 states have far more in common than separates them. Certainly this is true in cases applying the fair market value standard deriving not from state law but from generally accepted appraisal doctrine as embodied in a number of IRS revenue rulings. But even in cases applying the statutory fair value standard, which is derived purely from state law governing buyouts in dissolution and…
nu•cle•ar op•tion (noun): the most drastic or extreme response possible to a particular situation The litigation arsenal of business divorce lawyers contains weapons of varying firepower. The choice of weapon for any particular assignment will depend on many factors including the type and size of the business; whether the client is a controlling or non-controlling owner; the nature of the dispute; the form of the business entity (LLC, close corporation, partnership); the character and magnitude of the adverse owner’s complained-of actions and whether the…
Notwithstanding we’ve had no more than a dusting of snow thus far in my downstate New York neck of the woods, welcome to another edition of Winter Case Notes in which I visit my backlog of recent court decisions of interest to business divorce aficionados by way of brief synopses with links to the decisions for those who wish to dig deeper. This year’s synopses feature cases involving minority shareholder oppression claims in a father-daughter dispute previously reported on this blog; an appellate decision affirming the…
What’s become known as the bad-faith petitioner defense in judicial dissolution proceedings first emerged in Matter of Kemp & Beatley, 64 NY2d 63 [1984], where the Court of Appeals in a minority stockholder oppression case wrote that “the minority shareholder whose own acts, made in bad faith and undertaken with a view toward forcing an involuntary dissolution, give rise to the complained-of oppression should be given no quarter in the statutory protection.” It took several decades, but eventually…
In the last two years, fueled by a series of high profile cases involving media executives, entertainers, and other public figures, #MeToo has gained worldwide recognition as a symbol of the burgeoning movement against sexual harassment and assault, especially in the workplace. In our country, we have federal, state, and local statutes designed to protect employees against gender discrimination including sexual harassment and hostile workplace environment. Such laws generally do not extend protection to owners…
As if we need another case illustrating why fixed price buy-sell agreements should be avoided like the plague. Before we get to the case: A fixed price buy-sell agreement is one in which co-owners of a business select a specific dollar amount, expressed either as enterprise or per-share value, for calculation of the future buyout price to be paid an exiting owner or his or her estate upon the happening of specified trigger events such as death, disability, retirement, or termination of employment. Such…
Over the years I’ve blogged about hundreds of court decisions in business divorce cases. Believe it or not, one of the things I like to do is track the cases I’ve written about — or at least those that survive the court’s decision — to see if the decisions lead to settlement as they often do but, more importantly, to see how the decisions shape the subsequent case proceedings and, of course, searching for later court rulings helpful to my business divorce practice…