Nonprofit Basics: How To Wind up a California Charity
Episode 013: Interview with Justice Carolyn E. Demarest (Ret.) on Business Divorce Litigation
What is a petition for dissolution of marriage and what does it mean to serve the petition?
In yesterday's post, I discussed the Court of Appeal's unpublished opinion in Milks v. Affirmed Techs., LLC, 2024 WL 1502944 (Cal. Ct. App. Apr. 5, 2024), reh'g denied (Apr. 30, 2024). That case involved claims against a...more
The era of the old-fashioned general partnership long ago petered out, largely displaced by subchapter S corporations and, in the last few decades, limited liability companies, both of which allow pass-through taxation...more
Welcome to this 14th annual edition of Summer Shorts. This year’s edition features brief commentary on three recent decisions by New York courts in business divorce cases. The featured cases involve a suit pitting three...more
In 2022, The LLC Jungle covered the opinion Friend of Camden, Inc. v. Brandt in a post titled LLC Dissolution Vote Defeats Statutory Buyout. In the Friend of Camden case, the Court of Appeal held that an LLC membership vote...more
Delaware Chancery Court’s contractarian approach to all things LLC, embedded statutorily in Section 18-1101(b) of the Delaware LLC Act (“It is the policy of this chapter to give the maximum effect to the principle of freedom...more
Just a few weeks ago, I commented on a recent uptick in disputes centered on the breakup of professional services firms. In those disputes, we expect that the demands of the legal, accounting, and medical professions draw...more
Business divorce and non-judicial (a/k/a voluntary) dissolution of a business entity rarely intersect. But when they do, or even in a non-business divorce setting, if a business owner needs to rescind a certificate of...more
A member seeking to dissolve an LLC which owns a mothballed amusement park in Maggie Valley, North Carolina, didn’t have a “ghost of a chance” to close out a struggling, yet functional, company. In McClure v. Ghost Town in...more
A recent New Jersey appellate decision underscores the need for the leaders of limited liability companies (LLCs) to consider how to eliminate the risk of fraudulent, inaccurate or mistaken filings by former members and...more
After a transaction closes, sellers often wonder: when can all proceeds be distributed and the selling entity be dissolved? This question can be complicated, particularly where there are surviving representations, warranties,...more
The California Revised Uniform Limited Liability Company Act deals separately with the dissolution and cancellation of a California limited liability company and the cancellation of registration of a foreign limited liability...more
The last time we featured a notable decision on a claim for dissolution of a restaurant-operating LLC was in 2017, with a post by Frank McRoberts titled, “LLC’s Purpose Being Achieved? Business Doing Fine? Good Luck Getting...more
Kaufman v. DNARx LLC, C.A. No. 2022-0968-KSJM; C.A. No. 2022-0982-KSJM (Del. Ch. Dec. 29, 2023) (ORDER) - The Court of Chancery has broad power to address litigation misconduct....more
Michigan Attorney General (AG) Dana Nessel filed a lawsuit seeking injunctive relief and dissolution of several limited liability companies owned by John and Michele Church. The Churches’ companies have allegedly violated the...more
VH5 Capital, LLC v. Jeremiah Rabe, C.A. No. 2020-0315-NAC (Del. Ch. June 30, 2023) - The at-issue LLC had two members – the defendant and the plaintiff, both of whom also constituted the company's board. The company never...more
The owners’ agreement is the backbone of the closely-held business. In intracompany LLC disputes, few things are more important than what the operating agreement has to say on the subject. As a consequence, the pages of...more
In the world of LLCs, buyouts — where one member sells his/her membership interest to another member or the LLC itself — are commonplace. Buyouts generally fall into one of two categories: contractual — where the...more
Someday, perhaps, I’ll find the comedic inspiration to come up with a joke that begins, “An LLC, a partnership, and a close corporation walk into a bar . . ..” Until then, I’ll have to satisfy myself with writing about an...more
One of the most difficult periods in the lifecycle of a closely-held company is the period following the death of an owner. Apart from having to fill whatever business responsibilities the deceased owner left behind, the...more
Two recent decisions concerning title insurance illustrate that an insured’s negligence can result in an exclusion from coverage and that title insurers generally do not owe a fiduciary duty to their insureds....more
Our federal courts by and large are not hospitable to business divorce litigation. The two mainstays of the federal courts’ limited subject matter jurisdiction — federal question and diversity of citizenship — typically are...more
In re VBR Agency LLC, C.A. No. 2022-0328-JTL (Del. Ch. Apr. 20, 2022) - Petitioners often call upon the Court of Chancery to appoint receivers to settle a company’s business. As this decision describes, “[i]n recent years,...more
The California Revised Uniform Limited Liability Company Act provides procedures for both voluntary and judicial dissolution. When a member or members of a California limited liability company files an action for its...more
In Congel v Malfitano, New York’s highest court wrote that business partners are free to include in partnership contracts practically “any agreement they wish,” including about “the means by which a partnership will dissolve,...more
Plaintiff Lee Norris and defendant James Schaafsma are the sole member-managers of a development company – defendant Greymont Development, LLC – and disagree about the propriety of a derivative action initiated by Schaafsma...more