News & Analysis as of

LLC Agreements

Hogan Lovells

Holifield v XRI: Delaware Supreme Court reinforces primacy of freedom of contract for LLC agreements

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In Holifield v. XRI Investment Holdings LLC, No. 407, 2022 (Del. Sept. 7, 2023), the Delaware Supreme Court affirmed the lower court’s determination that the defendant violated XRI Investment Holdings’ LLC agreement when he...more

Morris James LLP

Chancery Finds Member Breached LLC Agreement in Unilaterally Dissolving the Company

Morris James LLP on

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

Locke Lord LLP

There Is a Big Difference Between ‎‎“Void” and “Voidable”‎

Locke Lord LLP on

In the iconic “The Princess Bride,” Miracle Max observes that there is a big difference between “all dead” and “mostly dead” and then goes on to prove it. In Holifield v. XRI Investment LLC, 2023 WL 5761367 (Del. Supr. Sept....more

Kramer Levin Naftalis & Frankel LLP

And Another Lender Blocking Provision Bites the Dust, Texas Bankruptcy Court Rules

One feature commonly seen in commercial lending transactions is a waiver of the borrower’s authority to file for bankruptcy without the consent of the lender. While such “blocking” provisions are generally upheld where the...more

Farrell Fritz, P.C.

Business Divorce in the Divorce Courts

Farrell Fritz, P.C. on

Folks hearing the phrase “business divorce” for the first time tend to focus unconsciously on the word “divorce,” tuning out the word “business.” The irony is that most business divorce cases have nothing to do with...more

Farrell Fritz, P.C.

LLC Forced Buy-Out Pits Fair Value Against Fair Market Value Against Power to Amend Operating Agreement

Farrell Fritz, P.C. on

Let’s see how good you are at predicting the outcome and its rationale in a recently decided case involving the following facts: The controller of a Delaware LLC has supermajority voting rights under the initial LLC...more

Hogan Lovells

XRI Investment Holdings v. Holifield: Precedent based on “magic words” leads to inequitable result - Corporate / M&A Decisions...

Hogan Lovells on

In XRI Investment Holdings LLC v. Holifield, C.A. No. 2021-0619-JTL, the Court of Chancery found that defendant Holifield violated a No Transfer Provision in the limited liability company agreement of XRI Investment Holdings...more

Morris James LLP

Chancery Suggests Alternative Approach To Contracts Providing That Prohibited Acts Are Void Ab Initio

Morris James LLP on

XRI Investment Holdings LLC v. Holifield, et al., C.A. No. 2021-0619-JTL (Del. Ch. Sept. 13, 2022) - Under precedents such as CompoSecure, L.L.C. v. CardUX, LLC (Del. 2018), acts defined by an LLC agreement as “void” or...more

Morris James LLP

Chancery Sustains Claims for Improper Termination of Agreements For Cause in Connection with a Joint Venture to Develop Data...

Morris James LLP on

W.D.C. Holdings, LLC v. IPI Partners, LLC, C.A. No. 2020-1026-JTL (Del. Ch. June 22, 2022) - Two entities entered into a joint venture to develop data centers for Amazon. One entity managed the joint venture day to day,...more

Morris James LLP

A Proposal to Permit Equitable Defenses to Noncompliant Acts That Are Described as 'Void' in an LLC Agreement

Morris James LLP on

In CompoSecure v. CardUX, 206 A.3d 808 (Del. 2018), the Delaware Supreme Court held that when parties use the word “void” to describe the consequences of a noncompliant act under an LLC agreement, the act is deemed void ab...more

Cohen Seglias Pallas Greenhall & Furman PC

The Series LLC: The Pros, Cons and Best Practices

Many new businesses chose to establish limited liability companies (LLC) because of the protection from individual liability, the benefit of pass-through taxation, and the form’s inherent flexibility. Certain types of...more

Bradley Arant Boult Cummings LLP

Avoiding the Pitfalls of Assigning an Interest in an LLC

One of the goals in a business divorce is finality – ending a business relationship once and for all. But what if the end isn’t really the end?...more

Morris James LLP

Chancery Explains Standards of Review for Receiver Determinations and Shifts Fees and Expenses in Dissolution

Morris James LLP on

In re Dissolution of Jeffco Management, LLC, C.A. No. 2018-0027-PAF (Del. Ch. Aug. 16, 2021) - When the Court of Chancery appoints a receiver to effectuate a company’s dissolution, certain determinations are subject to de...more

Morris James LLP

Chancery Finds Equitable Defenses Bar LLC Dilution and Redomestication Claims, and Holds it Lacks Jurisdiction to Dissolve a...

Morris James LLP on

In re Coinmint, LLC, C.A. No. 2019-0983-MTZ (Del. Ch. Aug. 12, 2021) - This decision illustrates that, in specific circumstances, the equitable defenses of waiver, acquiescence, and estoppel may preclude a party from...more

Morris James LLP

Chancery Addresses Whether LLC Agreement Modified or Eliminated Fiduciary Duties

Morris James LLP on

In Re Cadira Group Holdings, LLC Litigation, Consolidated C.A. No. 2018-0616-JRS (Del. Ch. July 12, 2021) - The Delaware Limited Liability Company Act provides that “the fiduciary duties of a member, manager, or other...more

McCarter & English, LLP

2021 Amendments To Delaware Corporate Law And Alternative Entity Statutes

The 2021 amendments to the Delaware General Corporation Law (the DGCL), the Delaware Revised Uniform Partnership Act (the DRUPA), the Delaware Revised Uniform Limited Partnership Act (the DRULPA), and the Delaware Limited...more

Cadwalader, Wickersham & Taft LLP

The New Normal? June 2021 - The Importance of Springing Members

Springing Members are a tool that a structured finance Lender can use to reduce the risk that a Borrower will dissolve under state law. Under most state laws, an LLC that does not have at least one member will dissolve. ...more

Morris James LLP

Implied Covenant of Good Faith and Fair Dealing Saves Employee’s Claim for Improper Termination Under Company’s LLC Agreement

Morris James LLP on

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

Morris James LLP

Court of Chancery Harmonizes Operating Agreement Governance Provisions To Resolve LLC Control Dispute

Morris James LLP on

Pearl City Elevator, Inc. v. Gieseke, C.A. No. 2020-0419-JRS (Del. Ch. Mar. 23, 2021) - Under Delaware law, limited liability company agreements are interpreted like other contracts; they are read as a whole in light of...more

Morris James LLP

Chancery Finds Implied-in-Fact LLC Agreement

Morris James LLP on

Robinson v. Darbeau, C.A. No: 2019-0853-KSJM (Del. Ch. Mar. 1, 2021) - As Robinson v. Darbeau demonstrates, Delaware law recognizes implied limited liability company agreements. Plaintiff operated a daycare as a sole...more

Morris James LLP

Chancery Applies Forum Non Conveniens Analysis to Grant Partial Stay of Dispute Between LLCs and Former Manager

Morris James LLP on

AG Resource Holdings, LLC v. Thomas Badford Terral, C.A. No. 2020-0850-JRS (Feb. 10, 2021) - In AG Resource, the Court of Chancery was tasked with determining whether it or a Louisiana state court should resolve similar...more

White and Williams LLP

Breaking Up (a Business) Is Hard to Do: How to Plan Ahead to Ease the Pain

In business, as in marriage, financial problems put stress on a relationship and are a common cause of divorce. No business divorce is easy, but partners who have ahead of time vetted governance, dispute resolution,...more

Morris James LLP

Chancery Finds Company Responsible for Advancing Costs of Defense to Its CEO in a Claim Brought by the Company

Morris James LLP on

International Rail Partners LLC v. American Rail Partners, LLC, C.A. No. 2020-0177-PAF (Del. Ch. Nov. 24, 2020) - The Delaware Limited Liability Company Act (the “LLC Act”) allows a limited liability company (“LLC”) to...more

Morris James LLP

Chancery Dismisses Complaint Challenging Dilution for Lack of Standing and Failure to State a Claim

Morris James LLP on

Hindlin v Gottwald, C.A. No. 2019-0586-JRS (Del. Ch. July 22, 2020) - The plaintiff, a minority investor (“Plaintiff”) in a Delaware limited liability company, Core Nutrition, LLC (the “Company”), brought an action for...more

Farrell Fritz, P.C.

Summer Shorts: For-Cause Termination of LLC Member and Other Decisions of Interest

Farrell Fritz, P.C. on

Usually I open my annual Summer Shorts post with some breezy comment about summer vacations, travel, or poolside reading. But this shelter-at-home year we find ourselves living and working in profoundly different...more

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JD Supra Privacy Policy

Updated: Dec 28, 2021:

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JD Supra, LLC
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Privacy Officer
JD Supra, LLC
150 Harbor Drive, #2760
Sausalito, CA 94965

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Updates to This Policy

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Contacting JD Supra

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