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In a recent decision from the Manhattan County Commercial Division, Justice Margaret A. Chan addressed a confluence of corporate-governance, fiduciary-duty, and bankruptcy-stay issues in Ragab v. SHR Capital Partners LLC. The ruling offers instructive guidance on two legal themes; the limits of the automatic bankruptcy stay in litigation, and the viability of fiduciary-duty claims against individual directors.   

Background

Hassan Ragab, founder and former CEO of SHR Capital Partners (“SHR”) filed suit against SHR and its board members, alleging that after his termination, they manipulated the valuation process to prevent his equity from vesting, among other things. According to the Plaintiff, this was not just a matter of contract but also a clear fiduciary-duty claim based on bad faith. SHR filed for bankruptcy during litigation, which complicated matters, but Hassan wished to proceed with claims against the individual board members.

Justice Margaret Chan’s March 2025 ruling allowed the litigation to proceed against the individual directors. This offers an important message for commercial litigators: bankruptcy won’t save your directors, and equity-based disputes may survive as fiduciary-duty claims when driven by alleged bad faith.

Key Takeaways for Practitioners – No Shield for Individual Board Members

Justice Chan disagreed with SHR’s claim that the bankruptcy stay protected the individual defendants, stating that the stay “applies only to SHR and does not extend to the individual defendants, who are not debtors in the bankruptcy proceeding. Because plaintiffs’ claims against the individual defendants do not involve SHR’s property or seek to impose liability on the debtor, the stay does not bar the proposed amendments.” Continue Reading Bankruptcy, Board Conduct, and Fiduciary Duty: Key Takeaways from Ragab v. SHR Capital Partners LLC

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Commercial loan documents are notoriously complex, packed with financial reporting requirements, compliance covenants, and collateral maintenance obligations.  For practitioners seeking the expedited relief of CPLR 3213’s summary judgment in lieu of complaint procedure, a critical question emerges: do these additional obligations disqualify the instruments from streamlined treatment?  In a recent decision, the New York County Commercial Division provided much-needed clarity on when ancillary provisions actually matter.

Legal Framework

Section 3213 of the CPLR allows plaintiffs to move for summary judgment in lieu of complaint when an action is based on “an instrument for the payment of money only.”  This expedited procedure bypasses the traditional pleading phase, but courts have long struggled with defining exactly what constitutes such an instrument.

The Court of Appeals established the foundational principle in Weissman v. Sinorm Deli, Inc., holding that “[w]here the instrument requires something in addition to defendant’s explicit promise to pay a sum of money, CPLR 3213 is unavailable.”  However, this broad language can leave practitioners uncertain about the countless ancillary provisions that populate modern commercial lending documents.

The Case: PFNGT LLC v. Liquid Capital LLC

In PFNGT LLC v. Liquid Capital LLC, Index No. 654595/2024, decided April 28, 2025, plaintiff PFNGT sought nearly $4 million under a secured promissory note, loan agreement, and related guaranty.  The defendants—borrower Liquid Capital LLC, guarantor Riccardo Spagni, and pledgor Wyoming Trust—mounted a sophisticated defense, arguing that the loan documents contained extensive non-payment obligations that disqualified them from CPLR 3213 treatment.Continue Reading When Additional Obligations Don’t Derail CPLR 3213: Commercial Division Clarifies the Test

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On April 29, 2025, the Justice Robert R. Reed of the Commercial Division of the Supreme Court of New York County issued a significant ruling in ACM MCC VI LLC v. Able Liquidation Three, Thomas Rossi, et al., granting a default judgment on liability against defendant Thomas Rossi in a commercial dispute after two…

On April 23, 2025, Matt Donovan and Viktoriya Liberchuk moderated a panel featuring Westchester Commercial Division Justices Linda S. Jamieson and Gretchen Walsh. The “town-hall” event covered a wide range of topics, including motion practice, artificial intelligence in legal proceedings, alternative dispute resolution, and trial procedures, to name just a few.

Below are some of…

You,Should,Know,This

As readers of this blog are well aware, we here at New York Commercial Division Practice take great pride in posting about proposed or amended rules of practice in the Commercial Division. Knowledge of the local rules is particularly relevant when filing documents. One recent local rule change that may catch our readers’ eyes is Nassau County Supreme Court’s new procedures for filing an order to show cause .

Litigants generally have two options when bringing a motion before a court in New York State: (i) a motion on notice; or (ii) a motion brought by order to show cause. An order to show cause is typically used for emergency applications or when a litigant is seeking some form of immediate relief, such as a stay or temporary restraining order. As part of an application for an order to show cause, a party’s attorney must submit an affirmation under 22 NYCRR § 202.7(f), which provides that the opposing party has been given notice of the date, place, and time that the application will be filed with the court in order to appear in response to the application. This is where things get interesting.Continue Reading A Good Lawyer Knows the Law; A Great Lawyer Also Knows the Local Rules

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Element5 Digital, Unsplash

Business Corporation Law § 619 (“BCL”) gives shareholders an “exclusive method . . . to test the validity of an election of a director.” Specifically, BCL § 619 states:

“Upon the petition of any shareholder aggrieved by an election, and upon notice to the persons declared elected thereat, the corporation and such other persons as the court may direct, the supreme court at a special term held within the judicial district where the office of the corporation is located shall forthwith hear the proofs and allegations of the parties, and confirm the election, order a new election, or take such other action as justice may require”

But under what circumstances can a court reverse an election? And what factors does a court consider? The case of Jazwinski v Justice Ct. Mut. Hous. Coop. is illustrative on these questions.Continue Reading It’s Time to CO-OPerate: Commercial Division Refuses to Overturn Election of Board of Directors

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Al Elmes, Unsplash

On March 4, 2025, the New York County Lawyers Association (“NYCLA”) celebrated a significant milestone during its Annual Gala held at The Pierre Hotel in Manhattan. The event commemorated the 30th Anniversary of the Commercial Division of the New York State Supreme Court.

At the Gala, the NYCLA presented its highest honor – the William Nelson Cromwell Award, which was first established in 1964. This prestigious award is conferred upon individuals who have demonstrated exceptional commitment to public service. This award is named in honor of William Nelson Cromwell, one of NYCLA’s earliest and most esteemed leaders, for “unselfish service to the profession and the community.”

At the Gala, the award was presented to the Commercial Division Justices in New York State. Among those present to accept the honor were Commercial Division Justices from across New York State, including Justice Boddie of the Brooklyn Commercial Division, Justice Driscoll of the Nassau County Commercial Division, Justices Chan, Masley, and Reed of the Manhattan Commercial Division, and Justice Jamieson of the Westchester County Commercial Division.Continue Reading A Court that Means Business: Three Decades of the New York Commercial Division

In a recent decision, the New York County Commercial Division reaffirmed the high bar that parties must meet when attempting to seal court documents in business disputes. In Linkable Networks, Inc. v. Mastercard Inc., the court ruled that Mastercard, despite having the consent of the plaintiff, was not entitled to an order sealing documents referenced in prior motion practice and produced in discovery. This ruling is another reminder of the high bar courts have set to seal documents, as discussed by my colleague Serene Carino in her blog post “Signed, Seal, Delivered.” It also highlights the balance courts strike between protecting sensitive business information and upholding the public’s right to access judicial records.

Under Section 216.1(a) of the Uniform Rules for Trial Courts, a court may seal or redact court records only upon a written finding of “good cause.” The rule stipulates that such an order must specify the grounds for sealing and take into account both the interests of the parties involved and the public’s right to transparency. In the business context, courts are more willing to seal records when trade secrets or competitive advantages are at risk.Continue Reading Commercial Division Clarifies Standards for Sealing Court Records in Business Disputes

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Oleksandr Sushko, Unsplash

Under CPLR 3213, a plaintiff can move for summary judgment in lieu of complaint which, under the right circumstances, serves as a useful tool to avoid extensive litigation and obtain speedy relief. Recently, in JADR Consulting Group Pty Ltd. v Ault Alliance, Inc., some loan sharks attempted to take advantage of the device’s efficiency.

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Regular visitors to this blog no doubt are aware that the rules of practice for the Commercial Division are centered on innovation, efficiency, cost-effectiveness, and predictability.  This includes the rules governing trial and trial preparation (Rules 25-33), which are important enough to merit their own, separate Preamble. 

As it stands, the Preamble to Rules 25-33…