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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: December 23, 2018

Court Affirms Order Dissolving Corporation Whose Shareholders Were Deadlocked

On December 12, 2018, the Second Department issued a decision in Matter of ANO, Inc. v. Goldberg2018 NY Slip Op. 08476, affirming an order dissolving a corporation whose shareholders were deadlocked, explaining:

We agree with the Supreme Court’s determination granting the petition for judicial dissolution. The evidence before the court demonstrated that the dissension between the two shareholders posed an irreconcilable barrier to the continued functioning and prosperity of the corporation. In determining whether dissolution is in order, the issue is not who is at fault for a deadlock, but whether a deadlock exists. The underlying reason for the dissension is of no moment, nor is it at all relevant to ascribe fault to either party. Rather, the critical consideration is the fact that dissension exists and has resulted in a deadlock precluding the successful and profitable conduct of the corporation’s affairs. Here, the record amply demonstrates sufficient dissension among the parties, resulting in a deadlock, so as to warrant dissolution.

(Internal quotations and citations omitted).

This decision relates to a significant part of our practice: business divorce (a break-up between the owners of a closely-held business). Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding a business divorce.

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