Deadlock in LLCs with two equal members can be a major problem and trigger for dissolution proceedings, which is why it’s crucial to consider deadlock avoidance provisions in the operating agreement. This week’s New York Business Divorce, and a related podcast interview on the Business Divorce Roundtable, features noted LLC expert and attorney John Cunningham on the topic of LLC deadlock and how to avoid it.
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An unusual, two-state battle between 50-50 owners of a New York LLC led to a decision earlier this month by Justice Kornreich dismissing a dissolution petition and denying injunctive relief following a New Jersey judge’s order appointing a fifth Director to break a Board deadlock. This week’s New York Business Divorce has the story.
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The decision highlighted in this week’s New York Business Divorce may not be new, but it is one that deserves serious attention as a possible remedial template in deadlock dissolution cases, where one 50% owner with operational control uses it as a sword to force the other 50% owner to accept an under-valued buyout.
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