Make Realty Corporation (“Make Realty”), a New York corporation, was dissolved by proclamation in 1994 and not reinstated. The Plaintiff alleged that in 2013 Make Realty entered into a contract to sell property in Brooklyn to the Plaintiff and a right of first refusal agreement with the Plaintiff for two adjacent properties. The corporate secretary of Make Realty executed the agreements. The Plaintiff alleged that Make Realty breached the contract by failing to convey the property. The Supreme Court, Kings County, granted Make Realty’s motion for summary judgment.

The Appellate Division, Second Department, held that there was insufficient evidence in the pre-discovery record to determine, as a matter of law, the authority of Make Realty’s corporate secretary. However, it also held that the Supreme Court erred in ruling that the agreements were unenforceable due to the failure to obtain a vote of shareholders under Business Corporation Law Section 909 (“Sale, lease exchange or other disposition of assets”). Under Business Corporation Law Section 1005 (“Procedure after dissolution”), a dissolved corporation’s Board of Directors can wind-up a corporation’s affairs without shareholder consent.

“A dissolved corporation, in winding up its affairs, has the power, inter alias, to ‘sell its assets for cash at public or private sale’ (Business Corporation Law Section 1005 [a][2]. This can be done by a corporation’s board of directors, without seeking authorization of the shareholders [citation omitted]. As it is undisputed that the subject transaction was entirely for cash, it follows that no shareholder authorization was required”.

Heights Properties 1388, LLC v. Make Realty Corp., 2017 NY Slip Op 04882, decided June 14, 2017, is posted at

http://www.nycourts.gov/reporter/3dseries/2017/2017_04822.htm.