
Last month, in Flor v Greenberg Farrow Architectural Inc., a three-judge panel of the New Jersey Appellate Division handed down an opinion with important lessons for business owners and practitioners in states that have adopted the Revised Uniform LLC Act, such as New Jersey, as well as in states that haven’t, such as New York.
The main lesson for those both in RULLCA and non-RULLCA states — one familiar to readers of this blog — is the danger of letting LLC formation and operation get ahead of the LLC’s constitutive documentation to the point where the putative LLC co-members disagree whether they entered into a binding transaction or, at most, a non-binding agreement to agree.
For those in RULLCA states, whose LLC statutes authorize judicial dissociation a/k/a expulsion of an LLC member, the additional lesson is not to underestimate the importance of the equities, both as to the circumstances justifying expulsion and the potential consequences that flow from expulsion.
Continue Reading Judicially Expelled Member Pays Heavy Price For Abandoning LLC