Bear Pond Trail, a minority shareholder of Stranahan Industries, wanted to rescind the sale of a certain piece of property.
BPT claimed the transfer was ineffective because David Stranahan, a majority shareholder, failed to comply with Business Corporation Law section 909, which requires shareholder approval (by 2/3 majority) of any proposed sale of a substantial portion of an entity's assets. (There must also be written notice of the meeting's date, time, and place, and, dissenting shareholders have the right to redeem their shares.)
In this instance, it was undisputed that the property was a substantial portion of the corporation's assets. Yet, Stranahan transferred the parcel to South Bay Realty, without the required shareholder meeting.
After the minority shareholders challenged the conveyance, and the Warren County Supreme Court voided the sale, the Appellate Division, Third Department, affirmed the outcome due to the corporation's failure to comply with the requirements of law.
Stranahan sure got mauled by that Bear.
To view a copy of the Appellate Division's decision, please use this link: Bear Pond Trail, LLC v. American Tree Co., Inc.