Business Divorce Cases of 2017 Focus On Oppression, Valuation and LLC Issues
February 16, 2018
New York courts last year decided an impressive array of business divorce cases involving closely held corporations, partnerships, and limited liability companies. Among the cases featured in this annual review are important rulings by the First, Second, and Third Departments of the Appellate Division addressing shareholder oppression, marketability discounts in fair-value contests for realty holding companies, the “purposeless purpose clause” in LLC operating agreements, and the interplay between LLC member withdrawal and statutory buy-out rights. Also featured is a novel dissolution dispute between brothers in which the trial court found both sides at fault but nonetheless ordered dissolution conditioned on the majority owner purchasing his brother’s interest for fair value.
Shareholder Oppression— Family Style
As any business-divorce litigator knows, shareholder oppression cases can be particularly contentious, especially when they involve family-owned businesses. The Third Department’s decision in Matter of Twin Bay Village, 153 A.D.3d 998 (3d Dept. 2017), which involved a family feud over a Lake George resort, took the cake last year for exemplifying the most egregious forms of shareholder oppression.
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