Legal Question in Business Law in New York

Sale of Stock

I owned 1/17 of an Insurance Agency. The assets were sold ( not the stock) for 35% of the retained earnings over a 5yr period. The company received an advance from the purchasing co which will be validated over the 5 years. I was told by the other stock holder who ownes 16 of the 17 shares, that I am not entitled to any money for my one share because the accounts receivables were a negative amount and there was an outstanding note to the bank. After the receivables were paid and the bank note paid there was still a credit and the other owner wrote himself a check. He said it was for the money he previously loaned the company? Am I entitled to any money? Thank you


Asked on 3/20/04, 10:16 am

3 Answers from Attorneys
richard feldman richard d. feldman

Re: Sale of Stock

The by laws should be reviewed and an accounting provided. I wouldn't let it go.

For a free consultation call me at 212 683 8677

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Answered on 3/20/04, 3:41 pm
William Frenkel Frenkel Sukhman LLP

Re: Sale of Stock

For a New York corporation to validly dispose of all or substantially all of its assets, shareholders must approve it. Was there a shareholders' meeting held and did you vote on this decision ? The validity and priority of the loan depends on several factors for which corporate documents and records must be reviewed. You are entitled to copies of these and should obtain them first to have them reviewed by an attorney and an accountant if you want to pursue this.

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Answered on 3/21/04, 8:22 am
Asi Kirmayer Kirmayer PLLC

Re: Sale of Stock

In general, if the other owner had a valid loan to the company, the repayment of that loan would have priority over your equity interest. However, this is only true if this loan was a valid loan, legally established, etc., etc., etc. Depending on the detailed facts of your situation, you may be entitled to some portion of the money. You need to consult with an attorney to figure out what, if anything, can be done.

I am available to discuss this with you at (212) 695-6400.

Best of luck.

Asi

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Answered on 3/20/04, 10:32 am


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