Opinion
Index No. 522187/2022
11-01-2022
In the Matter of The Application of AHMED N. MOHAMED and YASIN MOHAMED, Petitioners, Dissolution of BJ Organization of New York Inc., For Judicial Dissolution of BJ ORGANIZATION OF NEW. YORK INC., A Domestic Corporation, Pursuant to Section 1104(a) of. the. Business corporation -Law
Unpublished Opinion
PRESENT HON. LEON RUCHELSMAN JUDGE
DECISION AND ORDER
HON. LEON RUCHELSMAN JUDGE
The petitioners have: moved seeking dissolution pursuant to BCL §1104. (a). The respondents have opposed the motion. Papers were submitted by the parties and arguments held. After reviewing all the arguments this court now makes the following determination..
On December 29, 1.9.94 BJ Organization of New York was formed.. According to the petition Ahmed Mohamed owns 72.17% of the company and Yasin Mohamed owns 22.17% Of the company Which combined equals 94.87% of the company. The corporation is the owner of a mixed use building located at 2017 Church Avenue in Kings County.. According to the Corporation's Certificate of incorporation the corporation may issue up to two hundred shares and one hundred shares were issued to Yasin Mohamed oh November 23, 2004. The petitioners, seek the. dissolution of the company on the grounds the shareholders cannot, agree how best, to run the company and hence a deadlock exists.
Conclusions of Law
It is well settled that when considering the dissolution of a corporation ''the issue is not who is at fault for a deadlock, but Whether a deadlock exists" (Matter of Kaufmann, 225 AD.2d 775, 640 N.Y.S.2d 569 [2d. Dept., 1996]). Thus, ignoring the conduct or fault of any particular party "the critical consideration is the fact that dissension exists and has resulted in a. deadlock precluding the successful and profitable Conduct of the corporation' s. affairs" (Matter of Dream Weaver Inc., 70,.A.D.3d 941, 895 N.Y.S.2d 476 [2d Dept., 2010]) . Therefore, when there is really no dispute that a deadlock exists then a hearing is not required and dissolution, should be: granted (In re Dream Weaver Realty, 70 A.D.3d 941, 895 N.Y.S.2d 476 [2d Dept., 2010]).
In this case there is- no real dispute, that a deadlock exists and the; parties cannot work together in one corporation. Rather, the respondents argue the petitioners do not represent a majority of the shares of the corporation that is a pre-requisite to any dissolution action pursuant to BCL §11.04 (a) . The respondents point to; three contradictory statements of the petitioners which question their true percentages of ownership.. The first is deposition testimony of Ahmed Mohamed. who. testified that he is a fifty percent shareholder together with his brother petitioner Yasin (see. Deposition of Ahmed Mohamed, page 14 [NYSGEF Doc... No. 14]). However,, later in the deposition Mr> Mohamed explained that the corporation was formed along with Yasin and Abdo and that there were, no specific, percentages awarded each party since the- familial nature- Of the.- relationship between the- three- and the: informal nature of the corporate formation necessarily meant each party was an equal owner (see. Deposition, page 50). However, in 2004 following a disagreement with- Abdo., a document was executed by Mohamed, Yasin and Abdo wherein Mohamed and Yasin's older brother Ali was given a fifty percent ownership interest in the corporation. Ahmed repeatedly testified that such ownership interest, was not accurate and was: effectuated simply to punish ..Abdo for borrowing money, without, informing the other two. shareholders. Further, Ahmed testified that the. certificate awarding 100 shares to Yasin was really intended to be held in trust for all three owners (see;. Deposition, page 98)..
Second, pursuant to. a board meeting that took place on November 23, 2014 Ahmed Mohamed owned 18 0 shares and Yasin owned 20 shares which, means Ahmed, owns ninety percent of the corporation while.- Yasin owns ten percent. Third, the petition itself lists different percentages., namely 72.17% for Ahmed and 22.17% for Yasin. These amounts contradict the deposition testimony of Ahmed wherein the three owners Were- all equal. shareholders.. Thus, there are inconsistencies regarding the ownership' of the corporation.
The petitioners assert that, in any event the petitioners own more than a majority of the shares and thus dissolution is proper. They assert that notwithstanding any discrepancies concerning ownership they surely own a. majority of the shares.
In Singer v.. Evergreen Decorators Inc., 205 A.D.2d 694, 613 N.Y.S.2d 667 [2d Dept., 1994] the court held that when there Were questions of fact regarding ownership of the stock of a corporation then a request for dissolution could not be- granted without first resolving outstanding issues of ownership. As the court stated in Jedrzejcvk v. Gomez, 116 A.D.3d 632, 985 N.Y.S.2d 18 [.1st Dept., 2.014 ] "the parties' conflicting assertions and the inconsistent information in the corporate documents raise issues. of fact, including the validity, of the documents, that preclude a .summary determination of petitioner's Ownership status." '(id).
Thus, even if it is true, that petitioners- own. a majority of the shares,, nevertheless, dissolution cannot be granted until the precise percentages of ownership of each party is established.
This will further streamline the dissolution, process and will enable the parties to receive their respective and appropriate shares upon dissolution..
Therefore, the motion seeking dissolution is denied at this time to enable proper determinations of ownership to be established.
So ordered.