LLC Agreements

News & Analysis as of

Delaware Law Updates – Freedom of Contract in LLC Structure Is Not Absolute Where Parties Seek Bankruptcy Relief

In re Intervention Energy Holdings, LLC, Case No. 16-11247 (D. Del. June 3, 2016), the Bankruptcy Court for the District of Delaware dealt with the issue of whether a Delaware LLC lacked authority to file a Chapter 11...more

Preparing Yourself and Your Client for Chapter 11: Part I of II – The Petition Package, Filing the Case, Filing Fees, and First...

As a Chapter 11 debtor’s attorney, the prospect of serving as debtor’s counsel is an exciting – and increasingly rare – opportunity. The preparation for filing a Chapter 11 case involves negotiating complex cash collateral...more

Court Of Chancery Requires SLC Member Be A “Director”

Under the famous Zapata decision, a board of directors may take control of a derivative case, provided it meets the test set out in that opinion. But may such a board, or the managers in an LLC, delegate that authority to a...more

What is Business Divorce?

Most times, a business divorce is exactly what you think it is: a legal proceeding in which two or more business partners sever their business relationship. While on its face it is “just business,” the business divorce often...more

Delaware Court Voids LLC Agreement Provision Giving Creditor Veto Over Bankruptcy

A Delaware bankruptcy court has joined what appears to be a recent trend toward invalidating limited liability company operating agreement provisions that effectively afford lenders veto power over the LLC’s authority to file...more

Taxing LLC Options (It’s Complicated)

Options, warrants, convertible equity and convertible debt are all familiar tools of corporate finance. Taxing LLC Options covers the federal income taxation of non-compensatory options (NCOs) issued by partnerships and LLCs...more

Delaware Law Updates - PECO Logistics, LLC v. Walnut Investment Partners, L.P.

Drafting LLC Agreements for Undesirable Outcomes: Sophisticated investor holds a “put right” but has no basis to challenge valuation on the units that are being “put.” A Delaware Court of Chancery opinion addresses a...more

New IRS Audit Rules: Partnerships and LLCs Should Name A Partnership Representative For IRS Audits

New legislation will govern IRS audits of partnerships and LLCs for tax years beginning after December 31, 2017. The new rules will affect both existing LLCs and partnerships as well as new partnership and LLC agreements,...more

PECO Logistics, LLC v. Walnut Investment Partners, L.P., et al., C.A. No. 9978-CB (Del. Ch. Dec. 30, 2015) (Bouchard, C.)

In this opinion, the Court of Chancery resolved a dispute regarding a put right in an LLC agreement between PECO Logistics, LLC (“PECO”), a Delaware limited liability company, and two of its preferred equity holders, Walnut...more

Washington’s New Limited Liability Company Act –What to Know

Washington’s new Limited Liability Company Act became effective on January 1, 2016. The new Act introduces several changes to the previous laws that LLC managers and members should be aware of as we begin 2016. This update...more

Delaware Insider: When Deciding Whether to Judicially Dissolve an LLC, the Court May Find the “Purpose” of the LLC to Be Different...

Pursuant to 6 Del. C. § 18-802, if a member or manager of a Delaware LLC petitions for a decree of dissolution, the Delaware Court of Chancery may dissolve the LLC “whenever it is not reasonably practicable to carry on the...more

Court Rejects Private Equity Group’s Claims on Put Price in LLC Agreement

The Delaware Court of Chancery recently explained the calculation of a put price for units in PECO Logistics, LLC v. Walnut Investment Partners, L.P. The LLC Agreement provided as following methodology for calculating...more

New Partnership Audit Rules Impact Both Existing and New Partnership and LLC Operating Agreements

On November 2, 2015, President Barack Obama signed the Bipartisan Budget Act of 2015 (the Act) into law, instituting for tax years commencing after 2017 significant changes to the rules governing federal tax audits of...more

"Key Takeaways: Delaware LLCs - The Implications of Anson"

Skadden held a webinar on September 14, 2015, to discuss certain key aspects of the U.K. Supreme Court decision in Anson v. HMRC, with a focus on potential ramifications for multinational groups including Delaware LLCs (and...more

Court Of Chancery Orders Dissolution Despite LLC Agreement Bar

This decision may answer the question of whether an LLC Agreement’s bar of dissolution without a member’s consent trumps the statutory remedy of court-ordered dissolution when the entity’s purpose cannot be achieved any...more

How Do I Get Out of this Practice?

For years the goal of many young doctors was to gain ownership in their medical practice entity. For many, when the time came for them to “make partner,” they signed on the dotted line without fully understanding the legal...more

LLC Operating Agreements May Need Amending Under California’s New LLC Law

The California Revised Uniform Limited Liability Company Act (the “New LLC Law”) was signed into law by Governor Jerry Brown on September 21, 2012. The New LLC Law will entirely replace the current California law governing...more

AM General Holdings LLC v. The Renco Grp, Inc., C.A. No 7639-VCN (Oct. 31, 2013) (Parsons, V.C.)

In this Memorandum Opinion, the Court of Chancery (i) denied plaintiff’s motion for partial summary judgment on its claim that defendants breached a “prohibited investments” clause of an LLC agreement and (ii) granted, in...more

Senior Housing Capital, LLC v. SHP Senior Housing Fund, LLC, C.A. No. 4586-CS (Del. Ch. May 13, 2013) (Strine, C.)

In this memorandum opinion, the Court of Chancery awarded the plaintiff substantial payments, pre-judgment interest and attorneys’ fees and costs. Plaintiffs, entities that managed and invested in a fund that owned...more

Private Equity Fund Considerations In Light Of Delaware’s LLC Debate

Originally published in Private Equity and Contract Law360 on February 20, 2013. Partners of private equity funds and other investment partnerships should take notice of recent Delaware court decisions that have created...more

In re Mobilactive Media, LLC, Consol. C.A. No. 5725-VCP (Del. Ch. Jan. 25, 2013) (Parsons, V.C.)

In this memorandum opinion, the Delaware Court of Chancery found that a member of a joint venture breached a limited liability company agreement, breached its fiduciary duties by usurping corporate opportunities, and violated...more

The Debate Rages On Regarding Whether Default Fiduciary Duties Apply to LLC Managers Under Delaware Law

Earlier this year, we reported on the Delaware Court of Chancery's decision in Auriga Capital Corp. v. Gatz Properties, LLC, wherein Chancellor Strine held that traditional fiduciary principles apply to LLC managers or...more

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