Operating Agreement

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This week’s New York Business Divorce offers a trifecta of sorts, offering summaries of three recent decisions, one involving an LLC, another a partnership, and another a close corporation.
Continue Reading Recent Decisions Enforce LLC Member’s Right of First Refusal, Restrict Partnership Accounting, and Allow Damages Claim for Breach of Oral Shareholders Agreement

In this week’s New York Business Divorce, read about a new decision from New York County Commercial Division Justice Andrea J. Masley addressing an important, unresolved question of New York law: whether, and if so, to what extent, do minority LLC members owe fiduciary duties?
Continue Reading Do Non-Manager, Minority LLC Owners Owe Fiduciary Duties?

If you want to find out what can happen when an LLC agreement authorizes member removal for any or no reason but doesn’t address compensation for the terminated member’s interest, read this week’s New York Business Divorce.
Continue Reading LLC Forced Buy-Out Pits Fair Value Against Fair Market Value Against Power to Amend Operating Agreement

This week’s post considers a recent decision from New York County Commercial Division Justice Borrok, who offers well-reasoned guidance on the separateness between claims to specifically enforce a buy-sell agreement, on the one hand, and damages claims, on the other.
Continue Reading Never the Twain Shall Meet: Damages Claims Do Not Offset the Purchase Price in Buy-Sell Agreements

LLC members often enter into an operating agreement containing certain formality requirements, then exercise substantially less formality in their dealings. In those cases, the argument that a member waived his or her right to insist upon the formality requirements of the operating agreement is a familiar one. In a recent case, New York County Justice Borrok considers a party’s claim that text messages establish his 9.9% membership interest in an immensely valuable cryptocurrency business, despite admitted non-compliance with the member-admission requirements of the operating agreement. …
Continue Reading Text Messages Trump Formalities in Ownership Dispute Over Cryptocurrency Business

This week’s post considers a duo of recent decisions concerning disputes between LLC members over the terms of their operating agreement.  In the first case, the court considered whether to enforce an operating agreement as written despite evidence that the parties actually intended a different deal.  In the second, the court considered whether to enforce an operating agreement where its buyout terms were grossly unfair.  The cases’ different outcomes highlight the outer limits of the parties’ freedom of contract in LLC operating agreements. …
Continue Reading The Operating Agreement Controls, Unless Public Policy Says Otherwise

The interplay between the default rules of the LLC law and the members’ agreement sometimes gets complicated. In a duo of recent decisions from Justice Cohen, that interplay took center-stage when a majority of members invoked the default rules in an attempt to oust the managing member from authority. …
Continue Reading A Two-Act Play of LLC Default Rules and Manager Removal

In this week’s New York Business Divorce, we tackle one of the most spectacular and well-publicized business falling-outs of modern times: Michael D. Cohen’s departure from the Trump Organization LLC, his resulting criminal conviction, and his cooperation with the Federal Government’s various investigations into activities surrounding former President Trump J. Trump. As an alleged former officer of the Trump Organization, Cohen sued the company for indemnification under its operating agreement for millions of dollars in legal fees resulting from the sprawling array of civil, administrative, and criminal proceedings against him. Learn how Cohen’s claims were resolved in this week’s New York Business Divorce.
Continue Reading The Outer Limits of LLC Indemnification: Michael Cohen v Trump Organization