LLCs are like people. They can have the occasional existential crisis. Read about one LLC in search of purpose in this week’s New York Business Divorce.
Promise of Equity Falls to Operating Agreement’s Rigid Admission Requirements
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.
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First Department Upholds Minority’s Unilateral Termination of Majority-Appointed CEO Over Majority’s Objections
Can a three-person minority outvote a four-person majority to oust the majority-appointed, longtime CEO of a profitable company (who also happens to be the founder of the company) in a vote requiring supermajority approval?
The math ain’t mathing, you may be saying to yourself.
But today, we explore a case—SJI Renewable Entery Ventures LLC,
For Embattled Bich Family, “Full Membership” Requires Admittance Without Precondition
This week’s New York Business Divorce features an intra-family battle concerning the precise contours of admittance as a “full” member of the family business.
Capital Call Cancelled: A Fairness Defense to the Majority’s Mandatory Capital Call
This week’s post unpacks a novel estoppel defense that put the brakes on the manager’s right to make a mandatory capital call.
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Is an LLC Bound by its Own Operating Agreement?
This week in New York Business Divorce, read how a New York LLC can successfully evade an arbitration provision in its own operating agreement.
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Dissolution Defined: The First Department’s Recent Guidance on Interpreting Operating Agreements
How does the First Department tackle competing interpretations of an LLC operating agreement? This week’s post explains.
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Scrivener’s Error Keeps Sailboat-Owning LLC Afloat
A court is empowered to correct a mistake solely in the reduction of an agreement to writing. This week’s post shows that power at work in the interpretation of a sailboat-owning LLC’s operating agreement.
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Never the Twain Shall Meet: Damages Claims Do Not Offset the Purchase Price in Buy-Sell Agreements
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.
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The Operating Agreement Controls, Unless Public Policy Says Otherwise
This week’s post considers a duo of recent decisions concerning disputes between LLC members over the terms of their operating agreement. In the first case, the court considered whether to enforce an operating agreement as written despite evidence that the parties actually intended a different deal. In the second, the court considered whether to enforce an operating agreement where its buyout terms were grossly unfair. The cases’ different outcomes highlight the outer limits of the parties’ freedom of contract in LLC operating agreements.
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