CopyCited 17 times | Published | Court of Appeals for the Eleventh Circuit | 2015 WL 4461615
...As a consequence, NJC never made a
distribution to Cox and Cox never relinquished its shares. Although at all times a
∗
Honorable Patrick E. Higginbotham, United States Circuit Judge for the Fifth
Circuit, sitting by designation.
1
Florida Statutes §
607.1436.
2
Florida Statutes §
607.06401.
2
Case: 14-14115 Date Filed: 07/22/2015 Page: 3 of 41
shareholder, Cox attempts to prosecute its claim as a creditor of the now-...
...The
district court held an eight-day bench trial during which both sides presented
expert testimony regarding value and valuation methodology as to both entities.
The district court accepted the valuation for Pennysaver proffered by Cox’s
6
Id. at 1352-54.
7
Section
607.1436(1) provides:
In a proceeding under [section]
607.1430(2) or (3) to dissolve a
corporation, the corporation may elect or, if it fails to elect, one or more
shareholders may elect to purchase all shares owned by the petitioning
shareholder at the fair value of the shares. An election pursuant to this
section shall be irrevocable unless the court determines that it is equitable
to set aside or modify the election.
8
Fla. Stat. §
607.1436(4).
6
Case: 14-14115 Date Filed: 07/22/2015 Page: 7 of 41
valuation expert and valued Pennysaver at $36 million.9 The district court also
adopted the cash-flow ana...
...y 14.4 (purchase price-to-EBIDTA ratio
derived from comparable newspaper corporation sales), equals $235,840,202 (normalized
value of the News-Journal).
14
Cox Enters., Inc.,
469 F. Supp. 2d at 1112.
15
Id.
16
The district court cited section
607.1436(5), which provides, in pertinent part:
Upon determining the fair value of the shares, the court shall enter an order
directing the purchase upon such terms and conditions as the court deems
appropria...
...unaffected by post-judgment fluctuations in
share price.” 21
17
Dist. Ct. Docket No. 6:04-cv-00698-JA-DAB, Doc. 252 at 2. Citations to “Doc.” herein
refer to docket entries in the district court record in this case.
18
See Fla. Stat. §
607.1436(5) (providing that a purchase order “may include payment of
the purchase price in installments, when necessary in the interests of equity”); see also
Model Business Corporation Act §
14.34, Official Comment (“[M]any courts have
hesitated to award dissolution ....
...253–3.
10
Case: 14-14115 Date Filed: 07/22/2015 Page: 11 of 41
Following a hearing on the terms of the transfer of Cox’s interest and a
second round of briefing, the court issued a purchase order in compliance with
section 607.1436(5) and dismissed Cox’s suit under section 607.1436(6)....
...6:04-cv-698-Orl-28DAB,
2014 WL
3962694, at *1 (M.D. Fla. Aug. 13, 2014); see Doc. 497—1, 2.
16
Case: 14-14115 Date Filed: 07/22/2015 Page: 17 of 41
its right under [Florida Statutes §
607.1436(7)] to file notice of its intent to adopt
articles of dissolution so as to avoid payment to Cox of the ‘fair value’ of Cox’s
shares as determined by the [district court].” 44 In support of its belief, Cox noted
that NJC had uni...
...75 PBGC, along with other smaller creditors, appealed.
In Cox II, we rejected the conclusion that Cox had an equitable first priority
claim to NJC’s assets, vacated the district court’s order, and remanded the case
with specific instructions. We held, in accordance with section
607.1436(8), that
the election-to-purchase statute “require[s] that any payment made as a result of a
corporation’s share repurchase decision [must] comply with the distribution
requirements of [Florida Statutes §
607.06401], which pr...
...the corporation unable to pay its debts as they become due in the usual course of
business (so-called “equity insolvency”), or (b) would, when added as a debt to the
liabilities column of the corporation’s balance sheet, cause the corporation’s total
93
Fla. Stat. §
607.1436(8).
94
Cox II,
666 F.3d at 703.
28
Case: 14-14115 Date Filed: 07/22/2015 Page: 29 of 41
liabilities to exceed the corporation’s total assets (so-called “balance sheet
insolvency”)....
...the corporation files with the court a notice of its intention to adopt articles of
dissolution,”102 the parties in this case repeatedly—and jointly—requested and
100
Fla. Stat. §
607.06401(8) (emphasis added).
101
Cox II,
666 F.3d at 707-08.
102
Fla. Stat. §
607.1436(7) (emphasis added).
31
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received extensions of that deadline....
...Seeking to avoid the reversionary fate it faced under
dissolution, Cox endeavored alongside NJC to confect a joint sale of the
corporation that would allow NJC to satisfy, or partially satisfy, its liability due
103
See Doc. 315 at 3 (Cox Emergency Motion to Appoint Receiver).
104
Fla. Stat. § 607.1436(7).
32
Case: 14-14115 Date Filed: 07/22/2015 Page: 33 of 41
Cox as a shareholder as set out in the purchase order.105 Cox in essence made a
business judgment to bet o...
...ection (8)
viewed in isolation because the terms of the purchase order itself do not expressly
invoke the subsection (8) exception. What Cox looks past is the prior panel’s
simultaneous emphasis on the “overall scheme” set forth in sections
607.1436 and
607.06401 and that scheme’s interaction with the unique circumstances of this
case.110 Again, to our eyes, to the extent that the relevant distribution in this case
constitutes a distribution of indebtedness from NJC to Cox at the t...
...113 We understand that in its effort to
resolve that conflict the prior panel sought to “give effect to the Florida
legislature’s intent and accord meaning to all parts of the statute” by interpreting a
“payment” made pursuant to a purchase order under section
607.1436(5) to qualify
as a “payment” under section
607.06401(8) that must undergo the insolvency test
as assessed at the time of “payment.” 114
Acknowledging the purchase of alternative interpretations, in light of the
imperfect fit between the unique circumstances of this case and our plain language
reading of the statutory scheme we cannot hold that the panel clearly erred in
112
Fla. Stat. §
607.1436(8) (emphasis added); see Cox II,
666 F.3d at 707.
113
See Cox II,
666 F.3d at 706 (highlighting “an arguable conflict between [sections]
607.1436(6) and (8)”).
114
See id....
CopyCited 16 times | Published | Court of Appeals for the Eleventh Circuit | 36 Media L. Rep. (BNA) 1097, 2007 U.S. App. LEXIS 29533, 2007 WL 4461505
...BIRCH, Circuit Judge:
Defendant-appellant News-Journal Corporation (“NJC”) appeals the
determination made by the district court of the “fair value” of stock held by
plaintiff-appellee, Cox Enterprises, Inc. (“Cox”), pursuant to Fla. Stat. § 607.1436
(2003)....
...Unsatisfied with the explanations for this expenditure provided by NJC,
Cox filed suit on 11 May 2004, alleging various acts of fraud, waste, and
mismanagement. NJC then timely elected to purchase Cox’s shares “at the ‘fair
value’ of the shares” pursuant to Florida law. Fla. Stat. § 607.1436(1).3 Because
the parties were unable to come to any agreement, the district court held a bench
trial to determine the “fair value” of Cox’s shares....
...s or management of a corporation may
bring suit for dissolution of the corporation. Fla. Stat. §
607.1430. To avoid dissolution, the
remaining shareholders may elect to purchase all shares owned by the petitioning shareholder
pursuant to Fla. Stat. §
607.1436.
6
dollars worth of transactions in its twenty-five year history and more than fifty
percent of the daily newspaper transactions in the United States over the past
decade....
...determination to account for mismanagement and corporate waste, and that the
court should have awarded Cox prejudgment interest for the period between the
valuation date and the entry of judgment.
II. DISCUSSION
Fla Stat. § 607.1436 gives the court charged with valuing shares in a
corporation discretion to determine the most appropriate valuation method by
which to arrive at “fair value.” See G&G Fashion Design, Inc v....
...However, the
terms are not mutually exclusive. On one hand, as Florida courts have explained,
where “fair market value” would take into account appreciation or depreciation in
anticipation of corporate action such as a merger or acquisition, the valuation
process under § 607.1436 must exclude both positive and negative effects of any
such impending transaction....
...fair market value” standard for the
“fair value” standard provided by the statute. See Appellant’s Reply Br. at 11-12. This is
confusing the issue; the district court used a fair market value method to determine “fair value”
pursuant to § 607.1436 as was appropriate to the circumstances of this case.
15
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court ....
...2d at 873; In re Walt’s Submarine
Sandwiches, 569 N.Y.S.2d at 493, 173 A.D. 2d at 980; In re Blake, 486 N.Y. S. 2d
at 347, 107 A.D. 2d at 146; Morley,
915 F.2d at 1523.
Entry of an order directing the purchase of minority shareholdings pursuant
to Fla. Stat. §
607.1436 requires the dismissal of the underlying petition for
dissolution pursuant to §
607.1430. §
607.1436(6)....
...he effect of adjusting twice for
mismanagement and waste. Accordingly, we find no error in the court’s refusal to
include it.
E. Prejudgment Interest
Finally, Cox challenges the district court’s refusal to award prejudgment
interest. Section 607.1436(5) provides that the valuing court “may” award interest
“at the rate and from the date determined by th[at] court to be equitable.” Fla. Stat.
§ 607.1436(5)....
...purchased arises when the minority shareholder at issue has acted in bad faith.
Otherwise, the court has complete discretion as to whether to award interest and as
to the rate of any interest awarded.10
10
Cox’s statement that § 607.1436(5) “allows the court to deny [prejudgment] interest
only on a finding” of bad faith on the part of the shareholder constitutes a complete misreading
of the discretion accorded by the statute....
...make installment payments in order
arguments regarding Fla. Stat.
55.03 and 28 U.S.C. § 1961. Even if the award of postjudgment
interest were mandatory, the award of prejudgment interest is still a matter of the court’s
discretion pursuant to §
607.1436.
22
to stay in business, and that made by Cox regarding its desire to be paid in full by
lump sum with interest from the date suit was filed....
...ity to prejudgment
interest, we find no abuse of discretion in the court’s decision not to award
prejudgment interest.
III. CONCLUSION
NJC appeals the district court’s valuation pursuant to Fla. Stat. § 607.1436
of Cox’s 47.5% interest....
CopyCited 8 times | Published | Florida 2nd District Court of Appeal | 2006 WL 3019832
...Vanover created BlueSky, allegedly to compete with AntennaMast or otherwise interfere in its business. [1] Ultimately, the trial court determined that AntennaMast should be permitted to purchase all of Mr. Stone's interest in the corporation pursuant to section 607.1436....
CopyCited 7 times | Published | Florida 3rd District Court of Appeal | 1999 WL 140725
...Emberton,
438 So.2d 1082 (Fla. 3d DCA 1983); Williams v. American Crafts, Inc.,
129 So.2d 165 (Fla. 3d DCA 1961); see also Denmark v. Ridgell Furniture Co.,
117 Fla. 244,
157 So.2d 489 (1934). In determining the "fair value" of Munshower's shares, as required by section
607.1436(1), Florida Statutes (1997), "[a] discount for lack of marketability is properly factored into the equation because the shares of a closely held corporation cannot be readily sold on a public market." Blake v....
...Thus, we find the trial court's conclusions were supported by the evidence presented and there is no basis to disturb the findings or the valuations. We also find no error in the trial court's denial of Munshower's request for attorney's fees and expert witness fees. Section 607.1436(5), Florida Statutes, provides, in pertinent part, that a court may award a petitioner for corporate dissolution attorney's fees and expert witness fees if the court finds that the corporate directors acted in a fraudulent or illegal manner....
CopyCited 7 times | Published | Florida 3rd District Court of Appeal | 2004 WL 305741
...and Flash Lingerieat the Bal Harbour Shops in Miami Beach. Lisbet Ghilardi and her husband, William Younkin, own the remaining fifty percent interest in G & G. In March 2001, Garcia brought suit to dissolve G & G. Ghilardi and Younkin, pursuant to section 607.1436 of the Florida Statutes, elected to purchase Garcia's fifty per cent interest in the corporation....
...Because the parties could not agree on the value of Garcia's shares, the trial court was obligated to "determine the fair value of the petitioner's shares as of the day before the date on which the petition [to dissolve the corporation] was filed...." § 607.1436(4), Fla....
...ing business should be zero based on the investment value method. Garcia presented evidence that his shares were worth $150,000 based on the market value method. The trial court adopted the market value method and valued Garcia's shares at $150,000. Section 607.1436(4) and Florida case law neither define "fair value" nor provide criteria by which "fair value" may be measured....
CopyCited 6 times | Published | Florida 5th District Court of Appeal | 2005 WL 320703
...poration. Initially, the trial court rendered an order on Mr. Timko's action seeking dissolution of Ferrari pursuant to section
607.1430, Florida Statutes (2000). The court noted that Mr. Triarsi and Triarsi Enterprises had elected their right under section
607.1436, Florida Statutes (2000), to purchase the interest of Mr....
...The trial court then ordered further that: [E]ffective the date of this order, Mr. Timko shall no longer have any rights or status as a shareholder of Ferrari of Central Florida, except the right to receive the amounts awarded by this order, which, subject to all provisions of this order and section 607.1436, shall be enforceable in the same manner as any other judgment....
...I would reverse. NOTES [1] Appellant initiated another proceeding to dissolve the corporation pursuant to section
607.1430, Florida Statutes (1999). As a result, Appellee, Onofrio Triarsi, exercised his right to purchase all of Appellant's shares pursuant to section
607.1436, Florida Statutes....
CopyCited 5 times | Published | Florida 3rd District Court of Appeal | 2005 WL 2509895
...In 1998, Morales filed a petition for dissolution of Gilly Vending pursuant to section
607.1430(2) of the Florida Business Corporation Act (the Act). Rosenberg thereafter exercised her statutory right to make an irrevocable election to purchase Morales' shares pursuant to section
607.1436(1) of the Act....
...support those findings). We reject Morales efforts to have us re-weigh that evidence and the credibility of the trial witnesses on appeal. G & G Fashion Design, Inc. v. Garcia,
870 So.2d 870, 873 (Fla. 3d DCA 2004)(affirming a valuation pursuant to section
607.1436 and stating that fact-finder's determination as to value of business, if within the range of testimony presented, will not be disturbed on appeal where valuation of business rested primarily on credibility of witnesses). We also affirm the trial court's decision not to award Morales prejudgment interest on her Gilly Vending shares pursuant to section
607.1436(5) of the Florida Statutes. Section
607.1436(5) provides that "Interest may be allowed at the rate and from the date determined by the court to be equitable; however, if the court finds that the refusal of the petitioning shareholder to accept an offer of payment was arbitrary or otherwise not in good faith, no interest shall be allowed....
...See Cody v. Colonial Imaging Prods. & Serv.,
717 So.2d 1120, 1121 (Fla. 5th DCA 1998)(awarding costs to a fellow shareholder upon the voluntary dismissal of a dissolution action). Similar equitable provisions are contained in sections
607.1434 and
607.1436....
CopyCited 5 times | Published | District Court, M.D. Florida | 34 Media L. Rep. (BNA) 2380, 2006 U.S. Dist. LEXIS 46867, 2006 WL 1823332
...Cox requested relief principally in the form of money damages, but also sought, in the alternative, judicial dissolution of NJC. Defendants responded to Cox's request for judicial dissolution by filing an irrevocable notice of election to purchase Cox's shares pursuant to section 607.1436, Florida Statutes....
...Upon the parties' failure to reach an agreement on the "fair value" of Cox's shares, the responsibility fell to this Court to determine the "fair value" of Cox's shares "as of the day before the date on which [Cox's original petition] was filed." Fla. Stat. § 607.1436(4)....
...ANALYSIS My principal responsibility in this case is to determine the fair value of Cox's shares as of the day before Cox filed its suit against NJC. As a secondary issue, I must also decide whether Cox is entitled to "reasonable fees and expenses of counsel and of any experts." See §§
607.1436(5),
607.1430(3), Fla....
...Resolution of this second issue depends on whether or not Cox had probable grounds for its original claim that Defendants were misapplying or wasting NJC's corporate assets to the detriment of NJC and its shareholders. [14] See id. A. VALUATION OF COX'S SHARES "Section 607.1436(4) and Florida case law neither define `fair value' nor provide criteria by which `fair value' may be measured." G & G Fashion Design, Inc....
...t value of NJC as of May 10, 2004. 4. THE SUITABILITY OF A DISCOUNT FOR LACK OF MARKETABILITY In Munshower v. Kolbenheyer, Florida's Third District Court of Appeal held that "in determining the `fair value' of [a petitioner's shares], as required by section
607.1436(1), Florida Statutes [], a discount for lack of marketability is properly factored into the equation because the shares of a closely held corporation cannot be readily sold on a public market."
732 So.2d 385, 386 (Fla....
...The principal form of relief is, of course, an award commensurate with the fair value of the petitioner's shares. The only other form of relief which is sometimes allowable is an award of "reasonable fees and expenses of counsel and . . . experts." Fla. Stat. § 607.1436(5)....
...[i]n a proceeding by a shareholder or group of shareholders in a corporation having 35 or fewer shareholders if it is established that . . . [t]he corporate assets are being misapplied or wasted, causing material injury to the corporation."). In light of section 607.1436(5), I undoubtedly possess discretion to award reasonable fees and expenses of counsel and experts to Cox....
...fees and expenses of its counsel and experts. CONCLUSION A. FAIR VALUE I find that the fair value of Cox's 47.5% interest in NJC is $129,200,000. NJC will be required to pay this amount to Cox in return for Cox's shares in NJC. B. TERMS OF PURCHASE Section 607.1436(5), Florida Statutes, provides that: Upon determining the fair value of the shares, the court shall enter an order directing the purchase upon such terms and conditions as the court deems appropriate, which may include payment of the...
CopyPublished | Florida 4th District Court of Appeal | 2003 Fla. App. LEXIS 14375, 2003 WL 22190909
...t to compensate for the decreased marketability of being a partner in a closely held corporation. The trial court entered a final judgment finding that Fierro had previously made an irrevocable election to purchase Temple-ton’s shares, pursuant to section 607.1436, *933 Florida Statutes (2001)....
...As a result, the court entered judgment in favor of Templeton and against Fierro, but denied Templeton’s request for fees, finding that although Fierro breached her fiduciary duty to Templeton, such breach did not rise to the level of the illegality required to award fees pursuant to sections
607.1430 and
607.1436(5), Florida Statutes. The court did not indicate the method it used in arriving at the value of the company. After the entry of the final judgment, Fierro filed a notice of intention to dissolve the corporation pursuant to section
607.1436(7)....
...Fierro appeals the final judgment as well as the trial court’s ruling on her post-trial motions. We hold that the trial court erred in sustaining Templeton’s objection to Fierro’s election to dissolve the corporation, and reverse and remand for further proceedings consistent with this opinion. Section 607.1436 directs the procedure to be followed in these proceedings....
...entered a final judgment determining the fair value of the petitioner’s shares and ordering the purchase of those shares, the corporation may, within a prescribed period of time, file a notice of its intention to adopt articles of dissolution. See § 607.1436(7), Fla....
...Stat. (2001). “Upon filing of such articles of dissolution, the corporation shall be dissolved ... and the order ... [directing purchase of the shares] shall no longer be of any force or effect....” Id. Unlike the language in subsection one of section 607.1436, which gives the court the discretion to set aside or modify an election to purchase for equitable reasons, subsection seven does not grant the trial court similar discretion after an order determining fair value and directing purchase of the shares has been entered....
...On the contrary, the language in subsection seven leaves no question that the filing of an intention to adopt articles of dissolution at that time automatically nullifies the order and triggers the dissolution process without further order of the court. See, e.g., § 607.1436(7), Fla....
...This decision renders appellant’s remaining points on appeal moot. We accordingly reverse the final judgment entered in this case, as well as the post-trial order sustaining Templeton’s objection to Fier-ro’s notice of intention to dissolve, and remand for further proceedings consistent with section 607.1436(7), Florida Statutes....
...*934 REVERSED AND REMANDED FOR FURTHER PROCEEDINGS. POLEN and STEVENSON, JJ., concur. . It was alleged that, unbeknownst to Temple-ton, Fierro formed Omega Data with Temple-ton owning only thirty percent of the shares and Fierro and her husband owning the remaining 70%. . See § 607.1436, Fla....
CopyPublished | Court of Appeals for the Eleventh Circuit | 2012 WL 11015
...FACTS AND PROCEDURAL HISTORY
Cox, a minority shareholder of News-Journal, filed suit in May of 2004 seeking
relief for misuse of corporate funds and waste of corporate assets. This suit triggered
Florida’s election-to-purchase statute, Fla. Stat. § 607.1436....
...This appeal followed.
II. ISSUES ON APPEAL
PBGC and the Davidson Directors present the following issues on appeal: (1)
whether the district court’s order to distribute News-Journal’s assets to Cox complied
with Fla. Stat. § 607.1436, Florida’s election-to-purchase statute; (2) whether the
district court erred by granting Cox an equitable first priority claim to News-Journal’s
assets to the exclusion of News-Journal’s other creditors; (3) whether the district...
...Mgmt. Corp.,
531 F.3d 1339, 1343 (11th Cir. 2008)
(quoting Estate of Shelfer v. C.I.R.,
86 F.3d 1045, 1046 (11th Cir. 1996)).2
IV. DISCUSSION
A. Florida’s Election-to-Purchase Statute, Fla. Stat. §
607.1436
Florida law contains a detailed statutory scheme which creates an alternative
to dissolution in derivative suits by shareholders against corporations....
...purchasing the shares of the petitioning shareholder who initiated a dissolution
proceeding. After a corporation has elected to repurchase all of the shares owned by
the petitioning shareholder, the parties may agree upon the value of the shares. Fla.
Stat. § 607.1436(3) (“If, within 60 days after the filing of the first election, the parties
reach agreement as to the fair value and terms of the purchase of the petitioner’s
shares, the court shall enter an order directing the purchase of petitioner’s shares upon
the terms and conditions agreed to by the parties.”)....
...If the parties cannot agree on the
value, then the court must determine the “fair value”3 and enter an order detailing the
terms for the repurchase fixed by the court. These terms might include payment of
the purchase price in installments or the provision for security “to assure payment of
3
Section 607.1436(4) states,
If the parties are unable to reach an agreement as provided for in subsection
(3), the court, upon application of any party, shall stay the s....
...607.1430
proceedings and determine the fair value of the petitioner’s shares as of the
day before the date on which the petition under s.
607.1430 was filed or as of
such other date as the court deems appropriate under the circumstances.
Fla. Stat. §
607.1436(4).
8
the purchase price.” Fla. Stat. §
607.1436(5).4 Once the court’s repurchase order
becomes final the corporation has ten days to purchase the petitioning shareholder’s
shares unless it files with the court a notice of its intent to adopt articles of
dissolution. Fla. Stat. §
607.1436(7) (“The purchase ordered pursuant to
subsection (5) shall be made within 10 days after the date the order becomes final
unless, before that time, the corporation files with the court a notice of its intention
to adopt articles of dissolution . . . .”).
This repurchase order also triggers Fla. Stat. §
607.1436(6), which explains the
effect of the repurchase order on the petitioning shareholder....
...607.1430
and the petitioning shareholder shall no longer have any rights or status
as a shareholder of the corporation, except the right to receive the
amounts awarded by the order of the court, which shall be enforceable
in the same manner as any other judgment.
Fla. Stat. § 607.1436(6)....
...urchase price and any additional costs,
fees, and expenses as may have been awarded, and, if the shares are to be
purchased by shareholders, the allocation of shares among such
shareholders.
Fla. Stat. §
607.1436(5).
9
shareholder’s shares because it terminates the petitioning shareholder’s petition for
dissolution. In exchange for giving up this right, the petitioning shareholder has the
right to receive the payment awarded in the repurchase order, “which shall be
enforceable in the same manner as any other judgment.” Fla. Stat. §
607.1436(6).
The statute, however, places an important condition on these payments.
Subsection (8) provides: “Any payment by the corporation pursuant to an order under
subsection (3) or subsection (5), other than an award of fees and expenses pursuant
to subsection (5), is subject to the provisions of s.
607.06401.” Fla. Stat.
§
607.1436(8)....
...Thus any payment
made pursuant to a repurchase order must satisfy the insolvency test of the
11
distributions-to-shareholders statute judged at the time dictated by the distributions-
to-shareholders statute.
With these specific statutory provisions of Fla. Stat. §
607.1436 and
§
607.06401 in mind, the overall scheme envisioned by the election-to-purchase
statute may be summarized as follows: First, if a shareholder petitions the court for
dissolution of a corporation, the corporation may elect to purchase the petitioning
shareholder’s shares for fair value....
...ournal’s
ability to pay the price contained in the repurchase order diminished significantly.
12
B. The District Court’s Interpretation of the Election-to-Purchase Statute, Fla.
Stat. § 607.1436
The Davidson Directors and PBGC primarily argue on appeal that the district
court misinterpreted Florida’s election-to-purchase statute when it ordered the
distribution of News-Journal’s assets to Cox....
...Court under subsection (5) and must bear the consequences—if any—for this action.”
5
Subsection (8) states, “Any payment by the corporation pursuant to an order under . . .
subsection (5) . . . is subject to the provisions of s.
607.06401.” Fla. Stat. §
607.1436(8).
6
Subsection (7) states, “The purchase ordered pursuant to subsection (5) shall be made
within 10 days after the date the order becomes final unless, before that time, the corporation files
with the court a notice of its intention to adopt articles of dissolution.” Fla. Stat. §
607.1436(7).
13
(R.32-674 at 7.) It then ordered the distribution of News-Journal’s remaining assets
to Cox as a payment pursuant to the September 2006 repurchase order.
Both the Davidso...
...enforcement of Cox’s rights as a creditor. Entry of the repurchase order, Cox says,
terminated its status as a shareholder and gave it the right to enforce the September
2006 repurchase order “in the same manner as any other judgment.” Fla. Stat.
§ 607.1436(6).
14
C. Application of the Election-to-Purchase Statute, Fla. Stat. § 607.1436
This case presents the question of whether Florida’s election-to-purchase
statute forbids the distribution of corporate assets made pursuant to a repurchase
order when doing so would give a former shareholder priority over a corporation’s
other creditors and render the corporation insolvent....
...2d 186
(Fla.1950))).
Cox argues that subsection (8) should not even apply in this case because its
claim to the receiver “was not a payment as a shareholder, but the enforcement of its
rights as a creditor to enforce a judgment.” (Appellee’s Brief at 35 n.13.) This
highlights an arguable conflict between § 607.1436(6) and (8). Subsection (6) states
that “Upon entry of an order under . . . subsection (5) . . . the petitioning shareholder
shall no longer have any rights or status as a shareholder of the corporation . . . .” Fla.
Stat. § 607.1436(6)....
...We hold that Cox qualifies as a
shareholder for purposes of the distributions-to-shareholders statute.
Cox next heralds subsection (6)’s provision that states a repurchase order “shall
be enforceable in the same manner as any other judgment.” Fla. Stat. § 607.1436(6).
Cox maintains that under this provision it has a claim to News-Journal’s assets as a
judgment creditor....
...purchase the petitioning shareholder’s shares in the event of a petition for dissolution.
However, under the election-to-purchase statute, shareholders also have the option
to purchase the petitioning shareholder’s shares if the corporation does not. See Fla.
Stat. § 607.1436(1) (“[T]he corporation may elect or, if it fails to elect, one or more
shareholders may elect to purchase all shares owned by the petitioning shareholder
at the fair value of the shares.”)....
...For
example, subsection (8) only applies in the event of repurchase by the corporation.
20
It has no effect in the event of a shareholder repurchase because subsection (8) only
deals with distributions by the corporation. See Fla. Stat. § 607.1436(8) (“Any
payment by the corporation pursuant to an order under ....
...This distinction guides
our construction of subsection (6).
In the event a petitioning shareholder seeks to enforce a repurchase order
against a shareholder who has repurchased shares, it may do so “in the same manner
as any other judgment.” Fla. Stat. § 607.1436(6)....
...If
enforcing Cox’s repurchase order would require a payment by News-Journal in
violation of the distributions-to-shareholders statute, the statute forbids the payment.
We hold that any payment to Cox based on the district court’s September 2006
repurchase order must comply with the condition of § 607.1436(8) that the payment
21
satisfy Florida’s distributions-to-shareholders statute....
...Thus, on remand, the district court must
consider whether a payment to Cox would comply with the insolvency test of the
distributions-to-shareholders statute at the time of payment to Cox.
V. CONCLUSION
We conclude that the district court misinterpreted Fla. Stat. § 607.1436 and in
so doing erred in its order for the distribution of News-Journal’s assets. The district
court’s order dated August 13, 2010 is VACATED in its entirety. Any distribution
to Cox must satisfy subsection (8) of Florida’s election-to-purchase statute, Fla. Stat.
§ 607.1436....
...It is unnecessary for us to resolve the other issues presented in this
appeal because the district court’s ruling on these questions was predicated on its
erroneous decision to distribute News-Journal’s assets to Cox without applying
23
§ 607.1436(8)....
CopyPublished | Florida 2nd District Court of Appeal | 2012 Fla. App. LEXIS 669, 2012 WL 163915
...ainst Pfaff in February 2010, asserting claims for injunctive relief, judicial dissolution, partition, equitable accounting, and declaratory judgment. In response to the claim for judicial dissolution, Pfaff elected to purchase Jones’ shares under section 607.1436(1), Florida Statutes (2009). The parties could not reach an agreement regarding the fair value of Jones’ shares. Consequently, the trial court held a hearing and determined the fair value, as provided for in section 607.1436(4). Pfaff then chose to not purchase Jones’ shares and instead filed a timely notice of intention to adopt articles of dissolution, as provided for in section 607.1436(7). Jones then sought continued judicial dissolution of Synergy, but the trial court entered the order on appeal declining jurisdiction on the basis of the language in subsections (6) and (7) of section 607.1436....
...d prescribed by this rule.” (emphasis added)). The parties assert that the final order was the order determining the fair value of Jones’ shares, *886 which according to the statute, is “enforceable in the same manner as any other judgment.” § 607.1436(6), Fla....
CopyPublished | Florida 4th District Court of Appeal | 2013 Fla. App. LEXIS 3200, 2013 WL 692442
...such, we affirm. Appellant John Fountas and his brother, appellee Paul Fountas, owned appellee Microcomputer Resources, Inc. (“MCR”). John initiated proceedings to dissolve, and MCR exercised its statutory right to purchase John’s shares. See § 607.1436(1), *472 Fla....
CopyPublished | Florida 1st District Court of Appeal
...the parties regarding BBI’s operations and management. The
complaint also included a claim for an equitable accounting
regarding the copyright of the textbook.
Shortly after the dissolution action was initiated, Dr. Graham
filed a notice under section 607.1436, Florida Statutes, electing to
purchase all of Dr. Uphold’s corporate shares in lieu of the
dissolution. After the parties failed to agree on the fair value of Dr.
Uphold’s shares, Dr. Graham asked the court to make the
determination pursuant to section 607.1436(4), which triggered a
stay of the dissolution proceedings.
Approximately nine months later, Dr....
...custodian “shall exercise all powers of the corporation and shall
have exclusive authority to manage the affairs of the corporation
in the best interests of the corporation’s shareholders and
creditors.” The order recognized that the dissolution proceedings
were stayed under section 607.1436(4) but rejected the stay as
precluding a custodian’s appointment, stating that “other
causes/actions of the case are not stayed and proceed as usual.”
This appeal followed.
Analysis
Whe...
...of a corporation based on the limited grounds set forth in section
607.1430, Florida Statutes. As an alternative to the so-called
“corporate divorce,” one or more shareholders may elect to
purchase the shares of the complaining shareholder at the fair
value of the shares. §
607.1436(1), Fla....
...The buyout
election also prevents the petitioning shareholder from
discontinuing or settling the dissolution action, or selling or
otherwise disposing of his or her shares, unless the court
determines that it would be equitable for the corporation and the
other shareholders to do so. § 607.1436(2), Fla. Stat.
After a buyout election, the parties have sixty days to reach
an agreement on the fair value of the petitioning shareholder’s
shares and the terms of purchase. § 607.1436(3), Fla....
...607.1430 proceedings and determine the fair value of the
petitioner’s shares as of the day before the date on which
the petition under s.
607.1430 was filed or as of such other
date as the court deems appropriate under the
circumstances.
§
607.1436(4), Fla. Stat. After the court determines the fair value
of the shares, the court must direct the sale of the shares to the
shareholder(s) electing to purchase the petitioning shareholder’s
shares and dismiss the petition to dissolve the corporation.
§
607.1436(5)-(6), Fla....
...Stat.
In this case, the parties do not dispute that a statutory stay of
the dissolution proceedings was triggered upon Dr. Graham’s
request for the court to determine the fair value of Dr. Uphold’s
shares. And rightly so, as the language of section 607.1436(4)
clearly provides that a stay of the “s....
