Opinion
April 28, 1988
Appeal from the Supreme Court, New York County, Stanley Parness, J., Wallace R. Cotton, J.
In 1985, Ithaca, which is a New York corporation, was formed for the purpose, in substance, of developing a certain parcel of real estate in the vicinity of Orlando, Florida.
Thereafter, in 1987, Messrs. George and Dinos Androtsakis (petitioners), who hold 50% of the shares of Ithaca, instituted, pursuant to Business Corporation Law § 1104-a, a proceeding for the judicial dissolution of respondent Ithaca (respondent). Examination of the petition indicates that petitioners claim the assets of respondent are being looted by its president, Mr. Nick Spithogianis, who owns the other 50% of the shares of respondent.
While the petition for judicial dissolution was pending, petitioners moved, pursuant to Business Corporation Law §§ 1113 and 1115, for the immediate relief of, inter alia, the appointment of a Receiver to take possession of the assets of respondent, and, for a preliminary injunction to restrain the alleged ongoing looting of the corporate assets of respondent. In its opposing papers, respondent has, pursuant to Business Corporation Law § 1118, made an election to purchase petitioners' shares. The IAS court, inter alia, has granted petitioners' motion for the appointment of a Receiver, and has referred various issues to a Referee to hear and report.
We stated in Hahn v. Garay ( 54 A.D.2d 629, 629-630 [1st Dept 1976]) that "[i]t is well recognized that courts of equity exercise extreme caution in appointing receivers pendente lite because such appointment results in the taking and withholding of possession of property from a party without an adjudication on the merits". After reviewing the record, in view of respondent's election to buy out petitioners, we find an undertaking in the amount of $250,000 "sufficient to secure petitioner[s] for the fair value of [their] shares" (Business Corporation Law § 1118 [c] [2]).
Accordingly, we modify the IAS order to the extent of denying petitioners' motion for a Receiver, and delete from the order the appointment of a Receiver, upon condition that respondent post an undertaking in the amount of $250,000.
Concur — Murphy, P.J., Ross, Kassal, Rosenberger and Ellerin, JJ.