Two recent Brooklyn decisions test the procedural boundaries of shareholder oppression—one rejecting a standalone damages claim outside dissolution, the other sending a properly commenced dissolution proceeding down a plenary path.
Continue Reading Brooklyn Cases Test the Procedural Boundaries of Shareholder Oppression
Corporate management takes the win in this week’s New York Business Divorce with what appears to be the first New York appellate decision to apply the business judgment rule to a decision by a board of directors to oust one of its own under the “cause” standard for removal found in Section 706 of the Business Corporation Law. Whether there is, or is not, “cause” to fire a co-director, held the Court, is a matter falling comfortably within the board’s business judgment, even as a response to aggressive activism. So behave on that board. Otherwise, your colleagues may show you the door.
Continue Reading Co-Director Removal and the Business Judgment Rule
Some business divorce cases are about money. Others are about control. Today’s case, Homapour v 3M Properties LLC, 2026 NY Slip Op 04371 (1st Dept 2026), is about both.
As we often see with second and third generation closely-held family businesses, the informal trust and family hierarchy that may have helped build the enterprise
Consider the case of the LLC member who failed to meet a capital call and consequently was forced to sell its minority LLC interest valued by the managing member at $1.7 million, to the managing member in exchange for a non-recourse promissory note with no maturity date and no payments unless the former interest generates after-tax distributions, of which there were none to date. Found out how the courts ruled in this week’s NYBD post.
In this week’s New York Business Divorce, we encounter an unusual combination of adverse litigants: father and son versus mother and son duking it out in not one, not two, but three lawsuits simultaneously.
Continue Reading Multigenerational Intrafamily Business Dispute Defeated for Lack of Standing
Can an operating agreement require majority approval before a minority member may sue derivatively? A recent Delaware decision warns against letting authority provisions swallow the derivative claim whole.
Continue Reading The Derivative Claim and the Majority Approval Trap
LLCs are like people. They can have the occasional existential crisis. Read about one LLC in search of purpose in this week’s New York Business Divorce.
The oft litigated art of the capital call takes center stage once again in this week’s post, featuring two appellate rulings handed down last week, one sustaining and one invalidating a capital call.
Continue Reading Lessons on the Art of Drafting Capital Call Provisions
A recent Second Department decision reminds business divorce litigants that while K-1s may be powerful evidence of an economic interest, they cannot substitute for compliance with a partnership agreement’s formal admission requirements.
Continue Reading Tax Partner, Not True Partner: The Limits of K-1s in Business Divorce Litigation
Don’t snicker at that promissory estoppel claim buried in your opponent’s complaint. Every once in a while, a cause of action for promissory estoppel can salvage an otherwise nonviable claim for equity ownership in the form of a fallback damages remedy. Have a read in this week’s New York Business Divorce.
Continue Reading A Wrong in Search of a Remedy: Promissory Estoppel