Reading through a recent court opinion out of the New York Supreme Court, I am struck by the way the law has diverged in corporate governance litigation. There are two distinctly different approaches to the business divorce. Crossing the Hudson can make a world of difference in operating a closely…
The Business Divorce Law Report
Lockout of a Minority Member from the Closely Held Business
Oh, the fine art of the lockout. For a business divorce litigator, a lockout or expulsion of a minority member is a relatively common occurrence. Managing the lockout, from either the majority or the minority’s perspective, is a key issue that will set the tone of the litigation. WHY LOCKOUTS…
Supreme Court Sets Standard to Expel Member from Limited Liability Company
The Revised Uniform Limited Liability Company Act adopted in New Jersey permits a court to expel a member of a limited liability company when it is not reasonably practicable for the company to continue with that individual as a member. Expulsion, known as involuntary dissociation, based on the not reasonably…
Partnership Dissolution Presents Factual Issues
In a case turning on an unusual provision in West Virginia partnership law, the state Supreme Court sent a partnership dissolution action back to the trial judge to determine whether the plaintiffs were actually partners of the partnership that they were trying to dissolve. The opinion in Sugar Rock, Inc.…
Trial Judges Have Discretion to Dissolve an LLC or Dissociate a Member
Petitioning members and managers of limited liability companies need to choose carefully between dissolution and dissociation of a member when they initiate litigation to expel a “bothersome” member. If the petitioning member includes grounds for both, they will not be able to choose the preferred remedy. Rather, the trial judge…
Single Member LLC May Be a Poor Choice for Asset Protection
LLCs Can Protect Individual Assets From Judgement Creditors One of the principal reasons for forming a business entity is to protect the owners from personal liability for the debts of the corporation. At the same time, business owners may use the business, most often a limited liability company, as a…
Fraud Claim Against Yankee Star Derek Jeter Survives
Derek Jeter promised his new business partners that his ownership and support of the Frigo brand of men’s underwear would not conflict with the superstar Yankee’s obligations to sportswear giant Nike. In return, RevolutionWear, Inc. gave him 15 percent of the company and a seat on the board. Apparently, Nike…
Buy-Sell Agreements: Planning for the Business Divorce
Few of us have the liquidity that we need to contemplate the divorce while we are making plans to get marriedIt just doesn’t enter our minds at the time and, of course, when if it does later become an issue, it is way too late to come to an easy…
Parties to Arbitrate MD Expulsion
The subject of the Appellate Division’s recent decision in Ames v. Premier Surgical, LLC, Docket No. A-1278-15T1 (June 29, 2026) is who decides whether a dispute is subject to mandatory arbitration. But the nature of dispute here suggests a cautionary tale about withdrawal and valuation, and what happens when the…
Partner Who Wrongfully Dissolved Partnership Hit With Whopping 66% Minority Discount
Talk about playing your cards wrong. A partner with a 3.08% interest worth $4.85 million in a partnership that owns a major shopping mall likely will walk away with only a few hundred thousand dollars after a court decision finding that he wrongfully dissolved the partnership and deducting from the…