Can a court order the expulsion of an LLC member for misconduct absent language in the operating agreement so providing? Get the answer in this week’s New York Business Divorce highlighting a recent decision by the Appellate Division, Second Department, posing the issue in the context of a bitter dispute between two brothers.
Continue Reading Tzolis No Solace for Proponent of LLC Member Expulsion
Operating Agreement
The Perils of For-Cause Expulsion Provisions in LLC Agreements
By Peter A. Mahler on
The expulsion of an LLC member for breach of the LLC agreement, when combined with buyout provisions that leave the expelled member with little or no return on investment, is a sure-fire recipe for litigation, as evidenced in a recent decision by Manhattan Commercial Division Justice Melvin Schweitzer in Jain v. Rasteh. Read about it in this week’s New York Business Divorce.
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It Only Took 16 Years: New York Appellate Court Defines Standard for Judicial Dissolution of Limited Liability Companies
By Peter A. Mahler on
On January 26th, in a case called Matter of 1545 Ocean Avenue, LLC, the Appellate Division, Second Department, became the first New York appellate court since the LLC Law’s enactment in 1994 to articulate a standard for judicial dissolution of limited liability companies. Read about Justice Leonard Austin’s scholarly opinion for the court, from which two justices dissented in part, in this week’s New York Business Divorce.
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Continue Reading It Only Took 16 Years: New York Appellate Court Defines Standard for Judicial Dissolution of Limited Liability Companies
Interview with Delaware LLC Experts and Practice Manual Co-Authors John Cunningham and Vernon Proctor: Part II
By Peter A. Mahler on
This week’s New York Business Divorce presents Part II of my interview with the co-authors of “Drafting Delaware LLC Agreements”, in which prominent Delaware lawyer and LLC expert Vernon Proctor answers questions about Delaware LLCs from the litigator’s perspective. Don’t miss it!
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Continue Reading Interview with Delaware LLC Experts and Practice Manual Co-Authors John Cunningham and Vernon Proctor: Part II
Interview with Delaware LLC Experts and Practice Manual Co-Authors John Cunningham and Vernon Proctor: Part I
By Peter A. Mahler on
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”.
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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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Continue Reading Delaware Chancery Court Rulings Interpret Member Rights to Inspect LLC’s Books and Records