## Facts

- Chevreau, Ltd. was a closely held New York corporation in the artificial-fur fabric business, owned 50/50 by two family factions.
- The Wollman/Nierenberg faction owned half the shares and largely handled procurement through a related entity, Louis Nierenberg Corporation (the corporation’s principal supplier).
- The Littman faction owned the other half and largely handled sales and customer relationships.
- Corporate governance was evenly split, producing director and shareholder deadlock.
- The Littman faction had already filed a representative (derivative) action alleging the Wollman/Nierenberg faction was undermining Chevreau by diverting corporate business and customers to Louis Nierenberg Corporation.
- After that suit was filed, the Wollman/Nierenberg faction petitioned for judicial dissolution and sought appointment of a receiver to wind up and liquidate the corporation.
- Supreme Court, New York County ordered dissolution and appointed a receiver with authority to liquidate and distribute assets.
- The Littman faction appealed, challenging both dissolution and the receiver’s liquidation powers.

## Issues

1. Whether deadlock and shareholder/director conflict in a 50/50 close corporation required immediate judicial dissolution on the record presented.
2. Whether a receiver should be appointed and, if so, whether the receiver’s powers should include liquidation or be limited to preserving the business pending trial.
3. Whether the dissolution proceeding should be tried together with the pending representative (derivative) action to avoid inequitable or inconsistent outcomes.

## Decision

- The Appellate Division modified the order.
- It struck the provision directing dissolution.
- It allowed a receiver but limited the receiver’s authority to maintaining the status quo and conducting the ordinary business of the corporation, not liquidating assets.
- It directed that the dissolution proceeding be tried together with the pending representative action (without formal consolidation).

## Legal Principles

- Deadlock and serious hostility in a closely held 50/50 corporation do not, standing alone, require dissolution; the court considers whether the business can continue to function with interim safeguards.
- Dissolution is an equitable remedy and may be withheld when it would likely defeat or impair relief sought in related fiduciary-duty litigation.
- A receivership may be narrowly tailored to preserve corporate assets and operations pending adjudication, rather than used as a mechanism for liquidation.
- Closely related dissolution and derivative/representative claims may be tried together to permit a complete factual record and prevent dissolution from being used to advantage an alleged wrongdoer.

## Conclusion

The court refused to allow immediate dissolution of a deadlocked 50/50 close corporation where liquidation risked impairing a pending representative action, instead preserving the company through a limited receivership and a coordinated trial of the related disputes.


Matter of Wollman v. Littman, 35 A.D.2d 935 (N.Y. App. Div. 1st Dep’t 1970)