How to Expel a Member from a Limited Liability Company The removal of a member from a limited liability company, known as involuntary dissociation, is permitted by statute in most states and may also be permitted in an operating agreement. Removal is permitted when a member has engaged in wrongful…
A business divorce is the process by which the owners of a business separate their business interests. The process involves negotiation and may also require litigation. These cases can be divided into four phases: the emergent phase, the examination phase, the valuation phase and the resolution phase. Most owner lawsuits…
‘Business Divorce’ refers to disputes in which the owners of a closely held business, whether a corporation, limited liability company, partnership or limited partnership, must separate their business interests. In many cases, such as oppressed minority shareholder cases or oppressed LLC member cases, there are allegations that those in control…
New York does not recognize a cause of action for minority oppression of a member of a limited liability company. Judicial dissolution is a remedy available to the minority LLC member when the majority is unwilling or unable to promote the purpose of the company or continuing the business has…
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.…
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…
A partnership has no obligation to complete performance of its executory contracts, the Texas Court of appeals held in affirming a multi-million dollar trial court verdict involving a chain of TGI Fridays in Dallas. The case involved a joint venture formed with TGI Fridays and several entites that qualified as…
New York’s oppressed shareholder statute has a unique provision that was initially intended to prevent the oppressed shareholder from destroying a viable business. That is because the New York statute otherwise gives the court only two options: send the oppressed shareholder away or force the dissolution of the business. Other…
I don’t like reality TV, but I will admit that I thought the fights between the Paul Teutul Sr. and his son, Paul Jr., were the most interesting part of the show. Now that they are involved in litigation over the ownership of the company, I suppose I can take…