New York’s BCL requires at least 50 percent of shares to petition for dissolution based on deadlock, unless there has been a failure to elect directors. The fact that a shareholders agreement required the election of two deadlocked directors was not a basis to waive the statutory requirement. Parties avoid…
Courts use their authority to appoint a custodian to take control of a closely held corporation as a remedy to deadlocked directors or shareholders. A showing of serious or irreparable harm is required before a court will intervene in a deadlock among shareholders or directors; more than dissension is required.…
This seminal case by the New Jersey Supreme Court identifies minority oppression as the frustration of a shareholder’s reasonable expectations. A court may order the compelled purchase of a shareholder’s interest as a remedy for shareholder oppression when it is the only practical alternative to judicial dissolution. The minority shareholder…
Deadlock is more than an inability to make a decision. It is an inability to act under circumstances that present the real threat of harm to the business. Deadlock is triggered by the shareholders’ inability to elect directors. When there are no alternatives to prevent harm to the business, like…
Deadlock is the inability of the owners of a business to make critical decisions, a paralysis of the management of closely held corporation, limited liability company or partnership. The inability to maintain normal operations is a characteristic of a deadlocked business. Courts will intervene to prevent harm to a deadlocked…
Digital Camera International, Ltd. v. Antebi, et al., 11-cv-1823 (E.D.N,.Y. July 13, 2017) Statutes: N.J.S.A. 14A:12-7(1)(c) Facts:Shareholders of a New Jersey corporation participated in a variety of activities that would be classified as oppressive behavior, including the payment of persona expenses with corporate funds, operating a competing business, insider contracts…
Clark v. Butoku Karate Sch., LLC, No. 326638 (Mich. App., 2016) Statutes: MCL 450.4101, MCL 450.4305, MCL 450.4509 Plaintiff Joby Clark and Defendant were the sole members of a Michigan Limited Liability Company operating a karate school. Clark was the subject of a rumor that he had a sexual relationship…
The law that controls any business organizations is a creature of state law, and disputes among owners in a business divorce involve the application of the law where the business was formed. More often than not that means the law of the state in which the dispute is being heard,…
It was the stuff of which a good minority oppression claim is easily cooked up. The party in control of the corporation had used the corporate bank accounts as his personal piggy bank while operating a competing business, paid himself inflated office rents and bankrolled an extra-marital affair with money…
The prior owner of a woman-owned business will be required to pay upwards of $500,000 to an oppressed shareholder after a trial court found — and the Appellate Division confirmed — that she had entered into a valid agreement to transfer her shares in return for an agreement that allowed…