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Why Founders Should Never Rely on Verbal Promises of Equity: Lessons from the Radish Media Litigation
Startups are often built on speed, trust, and momentum. Founders and early employees dive in together, fueled by a shared vision and—frequently—handshake deals about equity. But as the Lim v. Radish Media saga shows, relying on verbal promises of ownership can become a multi‑year legal nightmare with zero payoff. In two rounds of litigation—Lim v. Radish Media (2024) and Lim v. Radish Media (2025)—the courts repeatedly rejected an early employee’s attempt to claim equity tha
2 min read
LLC Withdrawal and Post‑Withdrawal Obligations in New York: What Still Applies After You Leave
Withdrawal from an LLC is often misunderstood. Many members assume that once they give notice and formally leave, their obligations end. But as Flink v. Smith makes clear, withdrawal does not necessarily sever all contractual responsibilities. Depending on how an LLC’s operating agreement is drafted, certain obligations may survive withdrawal—and courts will enforce them. This is especially important in professional or closely held LLCs, where ownership transitions and buy
3 min read
When Transfer Restrictions Control: Lessons from Verderber v. Commander Enterprises Centereach, LLC
Transfer restrictions in LLC operating agreements often sit quietly in the background—until a member tries to sell, assign, or gift their interest. Then, as the New York Supreme Court illustrated in Verderber v. Commander Enterprises Centereach, LLC , they can become decisive. In this case, the Verderbers held a 20% membership interest in a real estate–holding LLC. When they eventually transferred their interest to their family entity, Verbenco LLC, a dispute erupted over (1
2 min read
Transferring Ownership Interest in a New York LLC: What You Should Know
If you’ve ever tried to transfer your ownership in a New York LLC, you may have discovered that it’s not as simple as handing over stock certificates or signing a quick assignment. New York treats LLC membership differently, and if you don’t follow the rules, you can end up with disputes, delays, or even a transfer that doesn’t legally stick. In this article, we walk through the basics using guidance from New York’s Limited Liability Company Law and a real-world case, Gartner
3 min read
The Enforceability of Informal Actions in New York Limited Liability Companies
In the operation of a New York limited liability company (“LLC”), written operating agreements and formal corporate procedures are undoubtedly best practices. Nevertheless, New York courts at times recognize that the absence of formal documentation does not render the conduct of LLC members legally insignificant. Indeed, long‑standing practices, oral understandings, and informal arrangements may be enforceable, provided they reflect mutual assent and do not conflict with the
4 min read
The Hidden Dangers of “Withdrawing in Principle” from an LLC
For many New York LLCs, relationships change long before paperwork does. A member may stop participating in operations, stop contributing capital, or declare themselves “withdrawn” from the business. But as Sealy v. Clifton LLC illustrates, failing to formally transfer or assign a membership interest —or to seek judicial dissolution —can create years of uncertainty, litigation, and financial exposure. 1. You’re Still a Member Until the Law Says You’re Not In Sealy , the adm
2 min read
What Happens When an Escrow Agent Steals the Money?
Escrow accounts are designed to protect buyers and sellers by holding funds neutrally until contractual conditions are met. But what happens when the escrow agent steals money—the very person entrusted to safeguard the money? Unfortunately, New York courts have addressed this scenario more than once, and the answer often surprises clients: someone still bears the loss, even though neither party committed the wrongdoing. A recent Brooklyn real estate dispute, Herman v. 818 Woo
3 min read
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