Adam Leitman Bailey, P.C. Helps Shareholders Regain Control of Their Building
In a recent matter, Adam Leitman Bailey, P.C. counseled a group of concerned shareholders in removing an incumbent board of directors of a prestigious Manhattan cooperative.
A group of concerned shareholders of a prestigious Manhattan cooperative were challenged and frustrated by an incumbent board. The board’s lack of truthfulness and transparency, unilateral decision-making, and failure to involve shareholders in critical decisions affecting the shareholders’ daily lives, the aesthetics of the building, and shareholder value, had become intolerable. After further research, Adam Leitman Bailey, P.C. discovered that the board had also drafted and instituted amendments to the bylaws of the corporation in violation of New York State law.
Partnering with the concerned shareholder group, Adam Leitman Bailey, P.C. developed a strategy to challenge the legality of the incumbent board’s decisions as well as the improper amendments to the bylaws. This strategy included petitioning for a meeting of shareholders to elect a new board of directors. The board’s counsel agreed to call for special meeting of shareholders after realizing the strength of Adam Leitman Bailey, P.C.’s legal position. Notably, Adam Leitman Bailey, P.C. also successfully negotiated with the board’s counsel: (a) to ensure that the incumbent board would not enter any contract or agreement relevant to the agenda of the concerned shareholder group until after the shareholder meeting was held; and (b) to have the entire board resign and stand for reelection. This was a significant victory, as the staggered terms of the directors meant that it could possibly take two years for Adam Leitman Bailey, P.C.’s clients to gain control of the board. However, the battle with the incumbent board was not complete: Adam Leitman Bailey, P.C.’s clients still needed to prevail in a new election in the meeting of shareholders.
Working daily with the firm’s client, Adam Leitman Bailey, P.C. strategized to identify a select group of shareholders who were interested in creating a fresh approach to leadership of the cooperative. Adam Leitman Bailey, P.C. also worked with its client to create a grassroots marketing campaign to shareholders regarding the new board’s objectives. Adam Leitman Bailey, P.C. also counseled its client on developing a communication strategy designed around prioritized issues in preparation for the shareholder election.
Leveraging its experience in board elections, Adam Leitman Bailey, P.C. reinforced to the client that an election is not won until all of the votes are inspected and counted. The client successfully accumulated a significant percentage of proxies prior to the shareholder meeting, but was still trailing immediately prior to the meeting. During the meeting, Adam Leitman Bailey, P.C. communicated to shareholders its client’s objectives and persuaded individual shareholders on a one-on-one basis about the benefits of electing a new board. These efforts ultimately leading to the client’s win of the election and instituting a new board of Directors.
Adam Leitman Bailey, Leonard Ritz, and Joanna C. Peck represented the victorious client in this matter.