Peter Mahler has long held a special affinity for blogging about buy-sell agreements gone wrong—and I can see why. Among the most heavily negotiated provisions in owners’ agreements, buy-sell provisions spark disputes spanning contract formation, valuation, and equitable remedies. The resulting decisions make great cautionary tales for litigators and draftspeople alike.
My first contribution to NYBD was a post about Walsh v White House Post Productions, LLC, a Delaware Chancery Court decision determining when the parties became irrevocably bound to follow through with a buy-sell provision. The takeaway from Walsh was simple: when faced with litigation over buy-sell agreements, courts often return to the fundamentals of contract and option law.
Six years later, Manhattan Commercial Division Justice Patel gives us a blogworthy buy-sell agreement decision, ET JV Holdings, LLC v TBH-ASL BSA Member LLC (Sup Ct, NY County Sept. 8, 2026), which doubles as an unusually vivid reminder of the lessons in Walsh.
The Ground Rules in Buy-Sell Agreements
Buy-sell provisions come in nearly endless varieties: they may give one owner a call right, another a put right, establish rights of first refusal, compel a redemption upon a specified event, or let one faction drag the other into a third-party sale. Despite that variety, they generally share a few characteristics:
- They are option contracts, subject to strict enforcement (see Walsh; Urban Archaeology Ltd. v Dencorp Investments, Inc., 12 AD3d 96 [1st Dept 2004]).
- They are trigger-driven. A buy-sell provision is dormant until the contractually specified event brings it to life, making identification of the trigger every bit as important as the price or valuation mechanism (see this post).
- They are some of the most immune from the courts’ equitable intervention. While there are some notable exceptions (see this post), courts hold parties to the stated terms of buy-sell provisions with unusual rigor (see this post).
The Colliding Buy-Sell Provisions in the Elie Tahari Joint Venture
On December 29, 2017 (this date becomes important later), fashion designer Elie Tahari formed a joint venture with brand-management company Bluestar Alliance. Under the terms of their venture, Tahari and Bluestar each would own 50% of the Tahari brands—known as TBH Brand Holdings LLC (“TBH”).
The parties negotiated and integrated two competing buy-sell provisions in the TBH operating agreement:
First, section 10.1 gave Tahari a one-time option to purchase Bluestar’s 50% TBH interest for $50 million during a 120-day “Buy Back Period,” beginning on the seventh anniversary of the Operating Agreement. Once Tahari served a Buy Back Notice, the parties had 45 days to negotiate and consummate the purchase.
Second, section 10.3 provided a very different exit route. Upon receipt of a qualifying bona fide offer for the “entire Company,” Bluestar could control negotiations for a “Pre-Approved Sale,” and the members agreed to cooperate so long as various conditions were met.
Tahari’s Premature Buyback Notice
By November 2024, Tahari decided that he would exercise his buyout rights under Section 10.1. His version of the Operating Agreement, however, said only that the buyout period would begin “on December ___ 24”—no one had filled in the blank. Therefore, on November 29, Tahari FedExed the buyback documents with instructions that they arrive “NOT BEFORE NOR AFTER, AND ONLY ON DECEMBER 1ST.”
Bluestar rejected the buyback notice as premature and contended that Tahari had used—and lost—his one shot. Section 10.1 described the Buy Back Option as a “one-time right,” and Bluestar argued that Tahari’s premature attempt to exercise it exhausted that right, leaving him unable to simply serve a second notice once the Buy Back Period actually opened.
The Hurried TPG Deal
Bluestar did not merely reject Tahari’s notice; it went on offense. “[I]mmediately after receiving, and only because” it received Tahari’s attempted Buy Back Notice, Bluestar contacted TPG about purchasing the Tahari companies in a $140 million transaction (the “TPG Deal”)—potentially far more valuable to Bluestar than Tahari’s $50 million option.
What followed was a compressed process for the TPG Deal. Before December 2, TPG had neither substantively discussed the company nor conducted any diligence on the Tahari brands. Yet the parties aimed to close by December 28—one day before Tahari’s actual Buy Back Period began.
Bluestar and TPG ultimately settled on a complicated structure for the TPG Deal rather than an outright sale. Existing members could retain substantial portions of their interests; depending on their elections, the purchaser could acquire as little as 51% of the Tahari companies, potentially reducing Bluestar’s existing 50% interest by just one percentage point.
Tahari argued that the TPG Deal flunked Section 10.3’s requirement of a sale of the “entire Company.” Because the TPG Deal permitted Bluestar to retain virtually its entire interest, Tahari contended, it was not such a sale.
Dueling Summary Judgment Motions
After a compressed pleading and discovery process, the parties teed up dueling summary judgment motions over which exit mechanism controlled the fate of TBH.
Tahari sought to enforce his buyout rights based upon the December 2 Buy Back Notice. He argued that Section 10.1 made the purchase, not delivery of the notice, the operative event required to occur during the 120-day Buy Back Period.
Bluestar sought a declaration that Tahari’s Buy Back Notice was premature and invalid, coupled with enforcement of Section 10.3 compelling Tahari to cooperate with the TPG Deal.
Bluestar argued that only the initial offer had to cover the entire Company. Once it received a qualifying offer, Bluestar maintained, Section 10.3 permitted negotiation of a final transaction for less than the entire Company.
The Court: Neither Party Complied with the Buy-Sell Provision it Sought to Enforce
Tahari’s Buy Back Notice Was Premature
Citing evidence of the parties’ drafting history and negotiations, the Court found that Tahari’s buy back right began December 29, 2024, and that the required timely event was Tahari’s delivery of the notice—not consummation of the purchase.
While acknowledging some logical appeal to Tahari’s argument that the premature notice should be excused because Bluestar had actual notice and suffered no prejudice, the Court rejected that position as incompatible with New York law’s requirement that option contracts—especially their timing—be strictly enforced. Citing Kaplan v Lippman, 75 NY2d 320 (1990), J.N.A. Realty Corp. v Cross Bay Chelsea, Inc., 42 NY2d 392 (1977), and Urban Archaeology, the court held that an option must be exercised within the time and in the manner specified. There was no legal basis to forgive a deliberately negotiated temporal boundary.
The TPG Deal Likewise Was Non-Compliant
Justice Patel next held that Bluestar’s proposed TPG Deal failed to satisfy section 10.3’s requirement that such a sale be of the “entire Company.”
The Court held that the phrase “entire Company” meant what it said. Bluestar could not satisfy a contractual requirement for a bona fide offer to purchase the entire Company, then negotiate a final structure permitting itself to retain nearly all of its existing interest.
The Court further declined Bluestar’s invitation to sever or disregard the offending terms and salvage the TPG Deal.
50/50 LLC Owners Trapped in Marriage?
We often emphasize careful buy-sell drafting in LLC agreements because New York law gives a dissatisfied member few default exit rights: a member generally cannot withdraw before dissolution; a transfer ordinarily conveys only economic, not management, rights; and judicial dissolution requires proof that continuing the business under the Operating Agreement is no longer “reasonably practicable.”
Tahari and Bluestar heeded that advice. Their agreement contained carefully negotiated escape routes. But they both botched the execution. And so their foresight went to waste; they remain 50/50 owners of a joint venture whose members, as Justice Patel aptly put it, “are now anything but joined.”
One possible escape hatch remains.
On December 30, 2024—this time inside the Buy Back Period—Tahari served a second Buy Back Notice.
Section 10.1 describes Tahari’s Buy Back Option as a “one-time right.” Bluestar therefore argued that Tahari fired—and missed—his one shot on December 2: either the premature notice exhausted the right or its untimeliness rendered the entire provision void. Tahari countered that a notice delivered before the option existed was a legal nullity and could not consume his sole opportunity to exercise it.
Justice Patel found the language ambiguous. With neither side offering meaningful briefing or extrinsic evidence on the issue, the court left the validity of the December 30 notice for another day.
A Poignant Reminder
My first NYBD post advised counsel considering a buy-sell provision to refresh themselves on contract formation and option law before deciding when the parties become bound.
ET JV Holdings adds an equally important corollary:
Before pulling the trigger on a buy-sell right, make certain you know exactly when the contract permits you to pull it—and what other contractual machinery your shot may set in motion.
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