Legal Question in Bankruptcy in New York

Re: Protection aginst business liquidation action from shareholder

This is not a question of solvency or insolvency and

has nothing to do with the Bankruptcy Code

It is my belief that a minority shareholder has

no ability to bring an action for dissolution

under the Business Corporation Law simply because

they are dissatisfied with the way the business

is being run, or because they are overruled at

any shareholders or board of directors meetings

requiring only a majority vote. Thus, the threat

to bring an action to dissolve may be an idle threat

without any teeth.

This could be altered, though, based upon what is

written in you By-Laws, and/or corporate minutes.

This could also be altered in the closely held

corporation realm by written agreement.

You would need to have all the corporate records

reviewed for this purpose as well as a review in

conjunction with the Judicial Dissolution provisions

of the BCL of the State of New York to ensure that

there is no basis for the suit.

In the divorce realm, you could be trumped. It

is my belief that a Court could order you to sell

the company if tnere was no other way for the spouse

to receive the value of her shares in the divorce

action. Thus, this would also require review.