At the 2023 LLC Institute recently held in Denver, CO, the NYBD authors had the pleasure of sharing their views from the Business Divorce trenches on emerging trends or potential trends in LLC litigation.  Here is a recap of the lively panel discussion, Frontiers of LLC Member Litigation: Sex Discrimination as Oppression, Freeze-Out Mergers, and Direct vs. Derivative Claims.
Continue Reading Greetings from the American Bar Association’s 2023 LLC Institute

Statutes and caselaw have imposed several limitations on shareholders’ ability to enter into enforceable voting agreements. But those limitations apply in the corporate context—few have migrated over to LLC member voting agreements. And as a recent decision from the First Department demonstrates, LLC member voting agreements may have fewer formality requirements than one might expect.
Continue Reading First Department Recognizes Cause of Action for Specific Performance of LLC Member Voting Agreement

A claim for “usurpation of corporate opportunity” is simple to allege, but difficult to prove. Two recent cases out of the Manhattan Commercial Division and the U.S. District Court for the Southern District of New York explore the bounds of the corporate opportunity doctrine under New York and Delaware law.
Continue Reading A Recurring Business Divorce Feature: Usurpation of Corporate Opportunity

This week’s post covers a case likely to make waves inside and outside of Delaware, where Vice Chancellor Laster explores the interplay between acts that are void ab initio and equitable defenses, and he encourages an appeal so that Delaware may reconsider its laws on the issue.
Continue Reading Magic Words Still Matter, and Equitable Defenses Can’t Save a “Void” Transfer

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