Bill on Bankruptcy: What's in the $83M ResCap Examiner's Report?
LLC managers often enjoy wide latitude and unrestricted “discretion” under the LLC’s operating agreement. At the same time, all contracts — including LLC operating agreements — are subject to the implied covenant of good...more
LLC managers owe fiduciary duties of loyalty, care, and good faith and fair dealing to both the LLC and the LLC’s members. (Corp Code §17704.09.) One of the most common claims in LLC litigation is “breach of fiduciary duty”...more
When LLC membership interests suffer harm at the hands of wrongful conduct by another member or the LLC’s manager, the litigation claims are usually based on fiduciary duties, including the duty of good faith and fair dealing...more
Last week, Peter Mahler blogged about a recent decision holding that a minority shareholder’s claim against its majority co-owners for breach of fiduciary duty in connection with a sale of the business to a third party...more
Smith v. Scott, C.A. No. 2020-0263-JRS (Del. Ch. Apr. 23, 2021) - The Delaware LLC Act provides that fiduciary duties may be expanded or limited by the provisions of an LLC agreement. If the agreement is silent, then...more
LLC managers (or members vested with decision-making authority) are sometimes lulled into a false sense of security by “sole discretion” provisions in their LLC’s operating agreement. That can be a costly mistake....more
In Coca-Cola Beverages Florida Holdings, LLC v. Goins, the Court of Chancery granted in part and denied in part a motion to dismiss a claim for breach of the implied contractual covenant of good faith and fair dealing, and,...more
The Nevada Legislature and Gov. Steve Sisolak have recently approved Assembly Bill No. 207 (AB 207), a bill passed under the leadership and guidance of Assembly Speaker Jason Frierson. AB 207 makes certain meaningful changes...more
When the Nevada legislature enacted the state's limited-liability company act, it did not prescribe the fiduciary duties, if any, owed by managers. As I observed...more
The implied covenant of good faith and fair dealing inheres in all contracts governed by Delaware law. In some circumstances, the implied covenant may apply to fill “gaps” in an agreement consistent with the parties’...more
It is no secret that LLC managers enjoy a lot of discretion regarding how they operate the LLC. Members of the LLC often find it difficult to challenge the manager’s decisions on key transactions, investments, and other...more
Over the last several years, the books-and-records proceeding and its corresponding shareholder rights of inspection seem to have entered a bit of renaissance period in the courts. ...more
The “Seven Critical Mistakes LLCs Make” Series - This series of posts covers some of the most serious mistakes that LLCs regularly make. Here are...short summaries of each: Choosing the Wrong Business Partners —...more
The Delaware Supreme Court recently affirmed the dismissal of a co-founder’s claim that a private equity investor and its affiliated managers breached the implied covenant of good faith and fair dealing in connection with the...more
Delaware has long been the jurisdiction of choice when forming a limited liability company (LLC). One reason is flexibility, with members themselves having the power to define their preferred relationship within their LLC...more
The implied covenant of good faith and fair dealing was recently addressed by Vice Chancellor Glasscock in the decision of Miller v. HCP & Co., C.A. No. 2017-0291-SG (Del. Ch. Feb. 1, 2018). The implied covenant applies only...more
The Delaware Limited Liability Company Act’s policy is to give the maximum effect to the principle of freedom of contract in LLC operating agreements. While the act permits parties to eliminate fiduciary duties that members...more
In re Oxbow Carbon LLC Unitholder Litigation, C.A. 12447-VCL (February 12, 2018) - This may be the definitive decision on when and how to apply the covenant in every LLC agreement to act in good faith and deal fairly. Here...more
On February 1, 2018, the Delaware Court of Chancery granted defendants’ motion to dismiss an action brought by minority unitholders of Trumpet Search, LLC (“Trumpet” or the “Company”). The defendants were other unitholders...more
In the annals of business divorce litigation and assorted other disputes between co-owners of closely held business entities, the cause of action for breach of the implied covenant of good faith and fair dealing likely wins...more
Miller v. HCP & Company, C.A. 2017-0291-SG (February 1, 2018) - This decision resolves the tricky issue of when the provisions of an LLC agreement do not allow “gap filling” so as to permit a claim for violation of the...more
Notwithstanding the ascendency of the limited liability company, the Delaware limited partnership continues to serve as an important, tax-advantaged vehicle for certain capital-intensive ventures — especially in the energy...more
The nation’s leading forum for business and shareholder disputes recently confirmed that alternative entities such as limited liability companies (LLCs), limited partnerships (LPs) and master limited partnerships (MLPs) can...more
Appellate Court Advance Release Opinions - AC36506 - Sidorova v. East Lyme Board of Education - Due to budget cuts, the Board of Education laid off the plaintiff who was a tenured French teacher. She sued for...more
Based on a number of cases decided by the Delaware courts in 2013, below we summarize practice tips regarding careful drafting of contractual provisions and complying with technical and statutory requirements....more