BVR's Guide to Fair Value in Shareholder Dissent, Oppression and Marital Dissolution

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Preview the Table of Contents & Excerpt from BVR's Guide to Fair Value in Shareholder Dissent, Oppression and Marital Dissolution

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For a list of links to full texts of court case opinions related to Fair Value Dissent and Oppression, click on the heading below.

Fair Value



Statutory Fair Value of Real Estate Holding Co. Includes Transaction Costs, Taxes

Brynwood Co. v. Schweisberger, 2009 WL 2218728 (Ill. App. 2 Dist.)(July 23, 2009)(unpublished) Several professional tenants in a commercial office formed a C corporation to purchase the property in 1979. The owner of an accounting firm took a lead interest (26%), served on the board of directors, and provided the company’s accounting services until he retired in 1996. The remaining shareholders’ interests ranged from 11% to 14%. The company owned and operated the building as its sole asset for nearly twenty-five years when the directors considered converting to an S corporation, primarily to avoid double taxation (at the corporate and shareholder level). The board also discussed selling the building and dissolving the company. The building was appraised five times, with values ranging from $850,000 to $1.43 million. In 2000, the company repurchased the shares of two non-tenant owners at $42.50 per share. During the next year, it offered to repurchase the interests of all non-tenant owners, including the retired accountant, for $48.50 to $50.00 per share. Click here to read the rest of this abstact.

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Bonus article by Douglas K. Moll: Shareholder Oppression and “Fair Value”: Of Discounts, Dates, AND Dastardly Deeds in the Close Corporation

The doctrine of shareholder oppression protects a close corporation minority investor from the improper exercise of majority control. When a minority shareholder establishes “oppressive”majority conduct, a court typically orders the majority to purchase the minority’s stock at its “fair value.” But what does fair value mean? Further, when is fair value to be measured? The questions are critical ones that affect the lives of countless close corporation investors and that generate an enormous amount of present-day litigation. This Article builds a case for defining fair value as enterprise value in the shareholder oppression context. The Article argues, in other words, that the buyout remedy should provide an oppressed minority investor with his pro rata share of the company’s overall value, with no reductions (or “discounts”) for the lack of control or liquidity associated with the minority’s shares. Moreover, the Article suggests that, in many situations, courts should allow an oppressed shareholder to choose between the “date of filing”and the “date of oppression”as the appropriate valuation date.

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  Fair Value In The News
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United States: Delaware Chancery Court Appraisal Price Almost 30% over Merger Price; New York Adopts Delaware ... - Mondaq News Alerts (registration)
Delaware Enacts Annual Update to Its Corporate Statutes - JD Supra (press release)
Africo: A Hidden 'Gold Mine' - Seeking Alpha
Comparing Appraisal Rights In Light Of Dell: US Vs. Canada - Law360 (subscription)
Dell Appraisal Fallout Impossible In Nevada - Law360 (subscription)
  Fair Value In The BVWire
The use of the appraisal remedy by dissenting shareholders in Delaware has surged in recent years, fueled by appraisal arbitrage. Proposed reforms to limit or eliminate appraisal arbitrage in Delaware should be rejected, according to a new draft article to be published in the Delaware Journal of...
Issue #163-1

In the February 10 issue of BVWire, we highlighted the article "NY’s Unfair Application of Shareholder-Level Marketability Discounts," written by Gil Matthews (Sutter Securities). The article has rekindled the debate over New York's out-of-step position with respect to the discount for lack of...
Issue #161-4

The use of "disclosure settlements" to resolve dissenting shareholder suits is increasingly raising eyebrows among judges. This skepticism found full expression in a recent decision in which the Delaware Court of Chancery rejected a settlement whose only benefit to the plaintiff stockholders was...
Issue #161-4

BVWire’s coverage of recent developments in DLOM has sparked some lively discussions. The dialog over discounts in fair value proceedings involving dissenting shareholder appraisals and oppressed minority shareholder buyouts has spilled over into social media. Bad behavior in NJ: Last week’s...
Issue #161-3

The issue of DLOM in fair value proceedings involving dissenting shareholder appraisals and oppressed minority shareholder buyouts is an issue of rising concern. Our reporting on the recent DLOM decision in the long-lasting Wisniewski v. Walsh case has fueled the fire. BV nightmare: In his...
Issue #161-2

  Fair Value In The Blogs
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