Freeze Out – Key Elements (though need not have all, on Plaintiff): burden of proof Black sheep deprived of director position >> employee position >> salary and benefits. Majority attempts to force or forces to resell the black sheep’s stock (often at a low price). Advising Clients keep record to demonstrate that black sheep is problematic, be able to show they tried to work it out – (notice of meeting, mediator, etc.), should demonstrate legitimate purpose. Want to frame defendant as guy.” “good MA Rule. Outcome court held stockholders of close corporation owe one Wilkes v. Springside Nursing Home Inc. – – another substantially the same duty as partners to one another. NY Rule. Outcome court says Glamore bought back Ingle’s shares at good price, Ingle v. Glamore Motor Sales, Inc. – – indicative of fair faith. Won’t overturn NY at-will rule. Buy-Outs – MA Rule want to justice,” restore the situation that should have been in place had wrongful freeze-out not – “restore occurred. Problem is that the black sheep is dead. Outcome entitled to money damages to the extent that money was removed from company (based on Brodie v. Jordan – – unjust enrichment of other directors who raised their salaries after freeze out), injunctive relief, and maybe a right to a dividend. Oppression – Smith v. Atlantic Properties – Another permutation of MA freeze out remedy. Doesn’t involve majority shareholder or Deadlock results in violation of IRS rule against accumulating certain amount of funds in majority group of shareholders. company, punitive taxation. Outcome Wolfson loses, expanded remedy of close corporation to minority (as opposed to – majority) oppression.
Freeze Out – Key Elements (though need not have all, burden of proof on Plaintiff): Black sheep deprived of director position >> employee position >> salary and benefits. Majority attempts to force or forces to resell the black sheep’s stock (often at a low price). Advising Clients – keep record to demonstrate that black sheep is problematic, be able to show they tried to work it out (notice of meeting, mediator, etc.), should demonstrate legitimate purpose. Want to frame defendant as “good guy.” Wilkes v. Springside Nursing Home Inc. – MA Rule. Outcome – court held stockholders of close corporation owe one another substantially the same duty as partners to one another. Ingle v. Glamore Motor Sales, Inc. – NY Rule. Outcome – court says Glamore bought back Ingle’s shares at good price, indicative of fair faith. Won’t overturn NY at-will rule. Buy-Outs – MA Rule – want to “restore justice,” restore the situation that should have been in place had wrongful freeze-out not occurred. Problem is that the black sheep is dead. Brodie v. Jordan – Outcome – entitled to money damages to the extent that money was removed from company (based on unjust enrichment of other directors who raised their salaries after freeze out), injunctive relief, and maybe a right to a dividend. Oppression – Smith v. Atlantic Properties – Another permutation of MA freeze out remedy. Doesn’t involve majority shareholder or majority group of shareholders. Deadlock results in violation of IRS rule against accumulating certain amount of funds in company, punitive taxation. Outcome – Wolfson loses, expanded remedy of close corporation to minority (as opposed to majority) oppression.
Corps1L_GMiller_2016.docx