LLCs

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Does a minority member of an LLC have a right to intervene in an action against the LLC by a creditor? How about if the creditor’s claim arises from collusion or other impropriety by the controlling member? This week’s New York Business Divorce provides answers courtesy of a recent appellate court ruling in the curious case of Baron v. Rocketboom LLC.
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Continue Reading Court Bars Minority Member From Intervening in Creditor’s Suit Against LLC

Last month the Appellate Division, Second Department issued an important decision concerning the application of the LLC Law’s default rules where the operating agreement is silent on a disputed issue. Get up to speed with this week’s New York Business Divorce.
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Continue Reading Appellate Court Finds Operating Agreement “Silent” on Sale of LLC’s Sole Asset, Upholds Approval by Majority Vote Under Statute’s Default Rule

If you think you’ve seen it all when it comes to corporate dissolution contests, think again as you read this week’s New York Business Divorce which looks at a case in which one LLC member opposed the other’s dissolution petition based on the latter’s alleged mental disability.
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Continue Reading Poorly Drafted Disability Clause in Operating Agreement Provides Novel Defense to LLC Dissolution Proceeding

The Delaware Court of Chancery last week issued a ruling of first impression applying the statute of frauds to invalidate an alleged oral LLC operating agreement. Will the ruling have any impact on New York LLCs? Find out in this week’s New York Business Divorce.
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Continue Reading Delaware Court Applies Statute of Frauds to LLC Operating Agreement

When it comes to rulings by its Court of Chancery, what happens in Delaware definitely does not stay in Delaware. This week’s New York Business Divorce looks at a recent decision by that important court, dismissing a petition for judicial dissolution of a Delaware LLC.
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Continue Reading Delaware Court of Chancery Narrowly Construes LLC Dissolution Statute

The Court of Appeals in Tzolis v. Wolff authorized derivative suits on behalf of LLCs. This week’s New York Business Divorce looks at two post-Tzolis lower court decisions addressing pre-action demand and contemporaneous ownership requirements for such suits.
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Continue Reading Post-Tzolis Rulings Address Demand and Contemporaneous Ownership Requirements for LLC Derivative Actions

It’s the perfect LLC storm: Accusations by the minority member of overreaching and breach of fiduciary duty by the controlling members, no operating agreement, and an LLC statute that affords neither party a judicial means of achieving the separation they each want. Read about it in this week’s New York Business Divorce.
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Continue Reading A Case of Mutual Frustration: Minority Member of LLC Can’t Compel Dissolution, Majority Can’t Compel Buyout

Matter of Youngwall, in which Justice Stephen Bucaria last March dissolved an unprofitable LLC owned by two brothers, makes another appearance in this week’s New York Business Divorce, this time focusing on the court’s recent decision denying a motion for reconsideration.
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Continue Reading Further Thoughts on Youngwall and Judicial Dissolution of the Unprofitable LLC

Two courts, one in Delaware and the other in New York, are asked to enforce operating agreements waiving the right to seek judicial dissolution of an LLC. Only one of them says “yes.” Can you guess which one? Get the answer in this week’s New York Business Divorce.
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Continue Reading WWDD (What Would Delaware Do) With an In Terrorem LLC Dissolution Waiver Clause?

A divided panel of the Appellate Division, First Department last week upheld the removal of an LLC member-manager by majority vote of the members, notwithstanding a provision in the operating agreement requiring all members to vote for the ousted manager in any election. Learn more in this week’s New York Business Divorce.
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Continue Reading Divided Appeals Court Upholds Removal of LLC Member-Manager Contrary to Voting Agreement