Buy-sell agreements, like a shotgun sale triggered by a deadlock, are the principal means by which the owners of closely held businesses protect against the worst consequences of deadlock. Commonly used shotgun provisions allow one party to set the price and allow the other party to decided whether to buy…
Owners of a closely held business, be it a corporation, limited liability company or partnership, may enter into contracts that are triggered when the principals have become deadlocked. Anti-deadlock provisions may provide for the appointment of an independent director, for alternative dispute resolution, or for the compelled sale of an…
‘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…
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.…
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…
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,…
Is an intractable deadlock among the shareholders good grounds to force the sale of a large, successful corporation? That was the issue before the Delaware Supreme Court in a case in which the trial court’s decision to sell the business as a going concern – over the objection of one…