This post is authored by Peter J. Sluka, a senior associate in the Manhattan office of Farrell Fritz and a member of the firm’s Business Divorce Group. As regular readers of the blog surely are aware, there are few provisions in an LLC or shareholders agreement more likely to be the focus of dispute than the buy-sell provision. Most times, these disputes expose a flaw in the language of the buy-sell provision itself. A poorly…

The COVID-19 pandemic kept New York’s courthouses dark the last few months, but it didn’t slow down the output of decisions by Commercial Division judges. If anything, the pause of new case filings and non-emergency motions in pending cases allowed judges to catch up on the backlog of undecided motions, as evidenced by an uptick in the number of recently reported decisions involving disputes between co-owners of closely held business entities. Of the ten New…

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 planning and multi-generational business continuity. But what happens if a contract provision governing distribution of an ownership interest upon death conflicts with the owner’s last will and testament? In Harris v Harris, 2020 NY Slip Op 31570(U) [Supreme Court, New York County Apr. 23, …

Was it “an unfortunate attempt to second-guess or even force a ‘do over’ of the appraisal,” as the one side would have it? Or was it a “rigged” and “corrupted” appraisal process that took place behind closed doors and severely undervalued the subject interest “by tens of millions of dollars” by relying on “false and misleading” financial information, as the other side would have it? That was the question posed in Yakuel v Gluck, 2020 …

Three shareholders co-own an 8-year old internet-based “marketeer” business that imports Chinese-manufactured sinks, faucets, and related plumbing fixtures that it sells primarily to distributors and retailers in the United States. They successfully apply with a bank for an increased credit facility up to $10 million. The loan application includes monthly cash flow projections prepared by the company’s CFO forecasting over 40% increase in sales the following fiscal year. The owners also submit their personal net worth…

I’m very excited to announce my latest podcast interview featuring Donald J. Weidner, Dean Emeritus of the Florida State University College of Law. But first . . . LLC statutes include default rules that govern the firm’s internal affairs unless provided otherwise by an operating agreement adopted by the members. When the members lack an operating agreement, the LLC statute’s default rules are the operating agreement. If you compare most LLC statutes today with the ones…

The ongoing coronavirus / COVID-19 pandemic has quite literally impacted everyone and everything in New York, including the courts, which were forced to temporarily cease non-essential functions. The result was a short-lived interruption in new business divorce decisions. But we are happy to see decisions of interest to this blog’s readers issuing once again, including a brand new opinion from Manhattan Commercial Division Justice Jennifer G. Schecter involving an attempted dissolution of a business…