Operating Agreements

News & Analysis as of

Do Equities Militate Against Restrictions Barring Petition for Dissolution?

Delaware courts often emphasize the freedom of contract of parties to define their rights, powers, duties, obligations, liabilities and restrictions in a limited liability or operating agreement under the Delaware Limited...more

Expansion of Fiduciary Duties Will Impact Florida LLCs – Is it Time to Update Your Operating Agreement?

Amendments to the Florida Revised Limited Liability Company Act go into effect on July 1, 2015. It governs all limited liability companies in the state of Florida. Effective July 1, 2015, the Act was amended, in part, to...more

2015 Legislative Changes to Florida's Limited Liability Company Act

During the 2015 legislative session, the Florida legislature adopted amendments to Chapter 605 of the Florida Statutes. Chapter 605 is the Florida Revised Limited Liability Company Act (Florida Revised LLC Act). The bill...more

Business Court Refuses To Unwind Mediated Settlement Agreement

The Defendants in last week's decision in DeCristoforo v. Givens, 2015 NCBC 53 were hellbent on getting out from under a settlement they had agreed to at mediation. They offered a host of challenges to the validity of their...more

Court Of Chancery Upholds Cash Calls To Eliminate Minority Owner

Using a cash call and then liquidation can overcome an operating agreement’s supermajority voting protections for minority owners in the right circumstances. What is most important is to always act fairly in terms of the...more

The Dangers of Operating An LLC Without an Operating Agreement

What could possibly go wrong if you and your fellow limited liability company owners decide to operate your LLC without an operating agreement? Lots of things, many of which could cause you significant financial pain and...more

Hampton v. Turner, C.A. No. 8963-VCN (Del. Ch. Apr. 29, 2015) (Noble, V.C.)

In a letter opinion analyzing how provisions of a limited liability company operating agreement fit together, the Court of Chancery denied defendants’ motion for summary judgment as to plaintiffs’ claim for judicial...more

Member Rights in Kentucky Limited Liability Companies

All members of Kentucky Limited Liability Companies, whether they hold a majority or minority membership interest, have rights under Kentucky statutory and common law, but these rights may be modified, curtailed or extended...more

Massachusetts Federal Court Holds That LLC Operating Agreement Does Not Shield Defendants from Liability for Breaching Their...

A recent decision by Judge F. Dennis Saylor of the U.S. District Court for the District of Massachusetts, Butler v. Moore, C.A. No. 10-10207-FDS U.S. Dist. LEXIS 39416 (D. Mass. Mar. 26, 2015), offers an example of how...more

Court Of Chancery Upholds Arbitration Clause In Breach Of Fiduciary Duty Case

This decision enforces an arbitration clause in an LLC agreement even when the claim asserted a breach of fiduciary duty. While not surprising in itself, the decision may also have broader implications about whether a...more

Operator Can’t Recover Drilling Costs For Affiliate’s Expensive Rig

In Elm Ridge Exploration Co., LLC v. Engle we are reminded of a little-used provision in the 1989 Model Form Operating Agreement. Article VI.D.1 allows the operator to use its own equipment, but his charges may not exceed...more

Reading Before Signing Is Advisable

It's pretty basic that your clients should read the agreements that they sign before they sign them. Or you should at least explain to your client the key provisions in what they are going to sign, if they are not going to...more

In a Business Owners Agreement, Should All Owners Be Equal?

Good business planning involves owners of the company developing and entering into a shareholders agreement, operating agreement or partnership agreement (owners agreement). A good owners agreement will allow the owners to...more

Downturn in the Oil and Gas Industry: It’s Time to Perfect Your Liens

Joint operations in the oil and gas industry long have been one of the conventional ways to reduce and spread the economic risks associated with exploration, drilling and production of crude oil and natural gas. With the...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

Court Ruling Confirms that SDVOSB Contractors Possess Procedural Due Process Rights Against Adverse Eligibility Determinations

The U.S. Department of Veteran Affair's ("VA") Center for Veterans Enterprise (“CVE”) has a tough and sometimes thankless job. Its role is to serve as a “gatekeeper” for VA contracting programs for service-disabled,...more

District Court Weighs in on Level of Integration Required to Shield Health Care Collaborations from Section 1 Scrutiny

In Medical Center at Elizabeth Place v. Premier Health Partners et. al, Case No. 12-cv-26 (S.D. Oh. Oct. 20, 2014), the Southern District of Ohio held that previously-competing health care systems who join together in a...more

Ohio District Court Deems Hospital Alliance a Single Entity Incapable of Conspiring Under the Antitrust Laws

On October 21, 2014, the U.S. District Court for the Southern District of Ohio granted Defendants’ motion for summary judgment, holding that Premier Health Partners (“Premier”) and its affiliate hospitals, Atrium Health...more

Orrick's Financial Industry Week in Review

EBA Consults on RTS on Contractual Recognition of Write-Down and Conversion Powers under BRRD - On November 5, the European Banking Authority (EBA) published a consultation paper on draft regulatory technical standards...more

Eighty Five Thousand Reasons Not To Represent An LLC Without The Approval Of A Majority Of The Members (and one Other Thing)

Be sure that an LLC member has the authority to hire you before accepting the representation of the LLC in a suit by or against another LLC member. That authorization generally requires a majority of the interest of the...more

What Every Business Should Know About Keeping Its Corporate House in Order

In This Presentation: - Corporate Records Housekeeping - Protecting Assets – Vis A Vis Employees And Others (Trade Secrets, Confidentiality And Non-Competition Agreements) - Protecting Assets – ...more

Another Bankruptcy Proofing Strategy Bites the Dust, or Does It?

In an effort to minimize the risk of loss in connection with a loan default, lenders often employ creative means to make it difficult, if not impossible, for a borrower to file bankruptcy....more

Who Runs my Joint Venture?

One of the primary purposes of a written partnership (or limited liability company (LLC) operating) agreement is to establish rights and obligations for management. In a general partnership or joint venture, any partner or...more

Is The LLC A Party To Its Own Operating Agreement?

Is an LLC a party to its own operating agreement? California’s new Revised Uniform Limited Liability Company Act (RULLCA) defines “operating agreement” as “the agreement, whether or not referred to as an operating...more

The Florida Revised Limited Liability Company Act Action may be required by Florida LLCs by December 31, 2014

In 2013, the Florida Legislature adopted the Revised Florida Limited Liability Act. The Revised LLC Act restates the Florida laws governing LLCs in an entirely new Chapter 605, which succeeds the prior LLC Act found in...more

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