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Category Archives: New York Law Update

Cross Pollination: Don't Limit Yourself

April 18, 2017

R. Shawn McBride recently published an article to the McBride For Business Blog on a topic that might be of interest: Cross Pollination:  Don’t Limit Yourself.

He examines how some regions are better at manufacturing, some regions are better at capital formation, some regions are better at fostering start-up companies and some regions are better for Fortune 500 companies.

You can see the full article here.

About the Author

R. Shawn McBride — R. Shawn McBride is the Managing Member of The R.Read the rest

New York Law Update: Shareholder Oppression and Forced Buyout (Post III)

December 1, 2016

When Piazza filed a lawsuit seeking judicial dissolution of the company based on oppression, Gioia Jr. responded that the action triggered Piazza’s obligation to sell his shares under the shareholders’ agreement.[1]  Indeed, the shareholders’ agreement provided that a judicial dissolution proceeding would be deemed a voluntary offer to sell and trigger buyout rights.  The court said, however, that such provision is not controlling “when the sale is the result of claimed majority oppression or other wrongdoing—in effect, a forced buyout.”  Under New York Business Corporations Law, there are two types of judicial dissolution proceedings—one under Section 1104 where there is corporate deadlock and another under Section 1104-a “to provide a remedy to minority shareholders who have suffered abuse at the hands of the majority and lacked a means for salvaging the value of their investment.”  For a shareholder agreement to trigger buyout rights, as Gioia Jr.… Read the rest

New York Law Update: Shareholder Oppression and Forced Buyout (Post II)

November 29, 2016

In Piazza v. Gioia,[1] Piazza and Gioia Sr. founded Kings County Waterproofing Corp. (KCWC) in 1979 and held 40% and 60% of the shares, respectively.  Gioia Sr.’s son also worked for the company eventually became a 1/3 owner, along with his father and Piazza.  Their shareholders’ agreement contained stock transfer restrictions and buyout provisions, which, among other things, gave the non-selling shareholder an option to purchase the selling shareholder’s shares at “the last stipulated price preceding the date of the notice to sell the shares.”  In 1996, Gioia Sr.… Read the rest

New York Law Update: Shareholder Oppression and Forced Buyout (Post I)

November 22, 2016

We write frequently about minority shareholder rights.  Really frequently.  We previously talked about Ritchie v. Rupe, a Texas Supreme Court case that made it harder for minority shareholders to bring lawsuits based on oppressive conduct by majority shareholders (see here).  We also discussed Bontempo v. Lare (available here), a Maryland case on remedies for shareholder oppression, which, in addition to dissolution, recognized equitable remedies, and Sneed v. Webre (available here), another Texas case, which held that the business judgment rule does not prevent minority shareholders of a closely held corporation from bringing a lawsuit on behalf of the corporation over the board’s objection. … Read the rest

When Things Fall Apart: Business Partnership, Disagreement, and Dissolution (Part IV)

September 8, 2016

In Mizrahi v. Cohen,[1] a dentist and an optometrist formed a limited liability company for the purpose of the construction and operation of a mixed-use building in which they intended to set up their respective offices.  The two did not have an LLC agreement at the time they formed the LLC; it was executed a few months later when they purchased the land.  The lender required an LLC agreement and the attorney who represented both members at the closing drafted an LLC agreement. … Read the rest

When Things Fall Apart: Business Partnership, Disagreement, and Dissolution (Part III)

September 6, 2016

In Saunders v. Firtel, as in Cline v. Grelock, the two business partners were close friends.[1]  Firtel was the sole owner of a pharmaceutical sales corporation called Adco and Saunders was a sales representative for a medical supply company.  In 1986, the two decided to enter into a formal business relationship by allowing Saunders to obtain a 49% shareholder interest in Adco and to become an employee of the company.  Their written agreement provided that both would devote their time and efforts to the business and receive an equal combination of compensation and fringe benefits but also allowed Firtel to spend considerable time away and apart from the business. … Read the rest

When Things Fall Apart: Business Partnership, Disagreement, and Dissolution (Part II)

August 30, 2016

In Cline v. Grelock,[1] the business partners were two lifetime friends who started a towing business called American Asset Recovery, LLC (“AAR”) d/b/a Hound Dog Recovery.  To get the business rolling, Grelock and Cline personally guaranteed a bank loan for AAR to purchase a motor vehicle for the business.  Unfortunately, the business was not very successful—it had substantial debts and did not operate at a profit.  The relationship between the two co-owners also deteriorated to the point where continuing the business was not practicable. … Read the rest

When Things Fall Apart: Business Partnership, Disagreement, and Dissolution (Part I)

August 23, 2016

Here at The R. Shawn McBride Law Firm, PLLC, we write and speak frequently on business partnership, especially the 4 Ds (death, disability, divorce, and disagreement), which can have a major impact on businesses.  In our previous blog series on business divorce, for example, we talked about why business partners may disagree, describing some instances of conflict that business owners may encounter, and what they can do to protect themselves and the value of their business in the event of a business break-up and the attendant business disruption. … Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.