Page 10 - Commercial Litigation

S10 | MONDAY, AUGUST 8, 2016 | Commercial Litigation
| NYLJ.COM

Business Divorce
third broker. Each broker will establish a The brokers will each value the company than attempting to have your LLC judicially

valuation which will be submitted to Mr. A and the average of the three valuations dissolved under the standards set by case
and Mrs. B simultaneously. The parties will will be used as the initial offering price law interpreting LLCL §702.10
« Continued from page S3
then average the valuations and divide by for the LLC.
•••••••••••••••••••••••••••••
a condition for dissolution—that continuing two to establish the Buyout Price. If Mrs. A third alternative could require the parties
the entity would be inancially unfeasible. B decides not to purchase Mr. A’s interest to split the portfolio, assuming more than one 1. Pursuant to New York Limited Liability Company Law (LLCL) §417, members of a LLC should adopt an
The parties also should have included pro- in the company, Mr. A will then have the investment exists. Mr. A, for instance, would operating agreement that contains provisions regarding
visions outlining how to unwind the busi- option to purchase Mrs. B’s interest in the be charged with creating two portfolios from “(i) the business of the limited liability company, (ii) the
ness relationship once the trigger event has company at the same “Buyout Price.” If the existing portfolio and presenting the two conduct of its affairs and (iii) the rights, powers, pref-
occurred in order to avoid a scenario where neither Mr. A nor Mrs. B decides to pur- options to Mrs. B. Mrs. B would then have the erences, limitations or responsibilities of its members, managers, employees or agents, as the case may be.”
2. Matter of 1545 Ocean Ave., LLC, 72 A.D.3d 121, 129,
a receiver is appointed to do the unwind- chase the other’s interest in the company, right to select the portfolio she preferred. The 893 N.Y.S.2d 590, 596 (2d Dep’t 2010).
ing for them. Such options include a buyout the company will be marketed for sale responsibility of dividing the one portfolio 3.1545OceanAve.,72A.D.3dat129,893N.Y.S.2dat596.
of one member or a forced sale to a third by the third broker to a third party at the into two portfolios would be determined by 4. Goldstein v. Pikus, 2015 N.Y. Misc. LEXIS 2889, 2015
party.
highest offered price.
a lip of a coin.
NY Slip Op 31483(U) (Sup. Ct. NY County 2015).
5. Goldstein, 2015 N.Y. Misc. LEXIS 2889, *45, 2015
A buyout provision in Mr. A’s and Mrs. B’s Alternatively, Mr. A and Mrs. B could have Had Mr. A and Mrs. B included either a NY Slip Op 31483(U), *40 (quoting 1545 Ocean Ave., 72
operating agreement could have gone some- included a provision regarding a forced sale buyout, a forced sale or a division of assets A.D.3d at 131).
thing like this:
to a third party in the case of a “Deadlock,” provision in the operating agreement, they 6. Goldstein, 2015 N.Y. Misc. LEXIS 2889, *46, 2015 NY
In the case of Deadlock, Mrs. B will have along the following lines:
would not be in a stalemate position with Slip Op 31483(U), *42.
7.Goldstein,2015N.Y.Misc.LEXIS2889,*46-47,2015NY
the right, but not the obligation, to purchase In the case of Deadlock, Mr. A and Mrs. B Slip Op 31483(U), *42 (quoting the operating agreement).
the uncertainty of potentially being forced to 8. Goldstein, 2015 N.Y. Misc. LEXIS 2889, *47-48, 2015
Mr. A’s interest in the company at 2 of the must sell 100% of their interests in the LLC stay in business with one another indeinitely. NY Slip Op 31483(U), *42-43.
estimated market value of the company to a third party. The parties will need to Rather, they would be asserting a contrac- 9. Goldstein, 2015 N.Y. Misc. LEXIS 2889, *49-50, 2015
(the “Buyout Price”). The company will obtain a valuation of the assets in order tual right to dissolve in the case of Dead- NY Slip Op 31483(U), *44-45.
10. On a inal note, it is always useful to include provi-
be valued by taking the average of the to determine the asking price for the LLC. lock. When there are contractual provisions sions regarding jurisdiction and choice of law. For a New
valuations determined by three separate If the parties cannot agree on a single bro- addressing disentangling from one another, York company, the obvious (and default) choice is New
brokers. Mr. A and Mrs. B will each appoint ker, each party will pick one broker and any dispute becomes a breach of contract York law, but the parties should also consider an arbitra-
a broker. Those brokers will then pick a
those brokers will appoint a third broker.
issue, which is much easier to tackle in court
tion provision requiring the parties to submit to arbitra- tion if any disputes arise.

New York

Civil Motion Citator

THE REVIEWS ARE IN.

AND THE SECRET IS OUT.

New York Civil Motion
Find out why the

Citator means the diference between winning

a motion and losing it.

“A True Secret to Civil Motion Practice Success”.

“For the past decade, my irst stop in dealing with

New York
a civil motion has been to check the

Civil Motion Citator.”

SAVE
To order your copy of the New York Civil Motion Citator call us at 1-800-832-1900 or visit www.verdictsearch.com
Use promo code 2629480 at checkout to receive your discount.
25%

www.verdictsearch.com

8 Laurel Avenue, Suite 1 • East Islip, NY 11730 | 1-800-832-1900