The importance of a well-drafted operating agreement cannot be underestimated when it comes to keeping the peace among members of a limited liability company. This week’s New York Business Divorce presents the first of a two-part interview of LLC experts John Cunningham and Vernon Proctor who have co-authored a highly recommended new formbook and practice manual called “Drafting Delaware LLC Agreements”.
Continue Reading Interview with Delaware LLC Experts and Practice Manual Co-Authors John Cunningham and Vernon Proctor: Part I
Operating Agreement
Do Advancement and Indemnification Rights Include Defense Costs of Litigation Misconduct After Officer Leaves Company?
By Peter A. Mahler on
The business partnership breakup and hydra-headed litigation known as Ficus Investments, Inc. v. Private Capital Management, LLC, is the subject of this week’s New York Business Divorce, as it looks at a recent, important ruling by Manhattan Commercial Division Justice Bernard Fried addressing rights of advancement and indemnification for litigation misconduct.
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Two-Member LLC Operating Agreement Contains Recipe for Dissension and Litigation
By Peter A. Mahler on
Case law involving judicial dissolution of LLCs is still in its infancy. A recent Delaware Chancery Court decision takes another small developmental step, while also highlighting the need for operating agreement buy-sell provisions that stand a reasonable chance of avoiding business divorce litigation. It’s in this week’s New York Business Divorce.
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Delaware Supreme Court Upholds Application of Statute of Frauds to Oral LLC Operating Agreements
By Peter A. Mahler on
In an important ruling yesterday, the Delaware Supreme Court upheld application of the statute of frauds to oral LLC operating agreements. Today’s posting links to Professor Larry Ribstein’s analysis.
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Beware Unreasonable Restraints on Alienation When Drafting Shareholder and Operating Agreements
By Peter A. Mahler on
Shareholder and operating agreements typically contain provisions restricting the right to transfer stock or membership interests. A recent decision by Justice Ira Warshawsky in Verderber v. Commander Enterprises Centereach, LLC, in which he refused to grant a preliminary injunction enforcing a transfer restriction, prompts this week’s New York Business Divorce to examine the ancient rule against unreasonable restraints on alienation.
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Delaware Chancery Court Rulings Interpret Member Rights to Inspect LLC’s Books and Records
By Peter A. Mahler on
Actions by non-managing business owners to gain access to company books and records are often precursors to dissolution or other more momentous litigation. The Delaware Court of Chancery recently issued several decisions in books and records actions involving LLCs which may provide guidance in cases involving New York LLCs as well. Catch up with the developments in this week’s New York Business Divorce.
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Court Enjoins “Squeeze-Out” Capital Call by Controlling Members of LLC
By Peter A. Mahler on
The baseball season is upon us but there’s no joy in Mudville or, at least, at the Cooperstown All Stars Village baseball camp where the co-owners of a limited liability company are playing hardball litigation. The Third Department umpire recently called a preliminary injunction in favor of the non-controlling team after the controlling member pitched a high-and-inside capital call. Read about it in this week’s New York Business Divorce.
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New York Court Follows Delaware Law to Construe Advancement and Indemnification Provisions of Florida LLC’s Operating Agreement
This week’s New York Business Divorce highlights an important decision by the Appellate Division, First Department, construing rights of advancement and indemnification for litigation expenses in a battle royal between majority and minority members of a limited liability company.
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Top 10 Business Divorce Cases of 2008
Have room for one more 2008 top-10 list? This week’s New York Business Divorce highlights the 10 most interesting business divorce cases from last year, with updated case citations and links to previous write-ups.
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Appellate Court Finds Operating Agreement “Silent” on Sale of LLC’s Sole Asset, Upholds Approval by Majority Vote Under Statute’s Default Rule
By Peter A. Mahler on
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