WHEN A BOARD OVERTHROW FAILS

May 16, 2012 — On today’s episode, co-op shareholders rise up against their board and try to have three members removed. But the effort fails, and the victorious board members then vote to have the co-op reimburse them for all the legal fees they racked up while fending off the challenge. Our question, from a fellow member of that co-op’s board, is simple: can they do that?

Our attorney panel takes on this question from all the angles, looking at the legal procedures for removing board members with a recall petition and special meeting, the differences between having board members removed with cause and without cause, when embattled board members are entitled to be indemnified by the co-op or condo for their legal fees, and the ramifications of board members’ voting in their own self-interest. On the panel this week are Marc Luxemburg of Gallet Dreyer & Berkey and Adam Leitman Bailey of Adam Leitman Bailey P.C.