Litigation over who is—and who is not—a member of a limited liability company has become a defining feature of LLCs. A recent First Department decision suggests a shift away from informality and back toward strict compliance with the contractual mechanics of admission.
Continue Reading Promise of Equity Falls to Operating Agreement’s Rigid Admission Requirements
This week’s post kicks off the fall season with a preview of two cases that should cause an LLC to think twice about what it means to award equity to an employee.
Continue Reading Conditional Grants of Membership Interests Are a Roadway to Courtroom Conflict
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
Preliminary injunctions are a powerful tool in the business divorce litigator’s toolbox, and they often involve a race to the courthouse. This week’s post offers a reminder that sometimes, that race is critical; courts will be more inclined to preserve the status quo with a preliminary injunction than to undo action with one.
Continue Reading Too Little, Too Late: Court Sides with Ousted Member, but Denies Preliminary Injunction Undoing Termination