News & Analysis as of

Operating Agreements Limited Liability Company (LLC)

Alert: The New Connecticut Uniform Limited Liability Company Act and its Effect on Your Operating Agreement

by Pullman & Comley, LLC on

The Connecticut Uniform Limited Liability Company Act (“CULLCA”) went into effect in Connecticut on July 1, 2017. The new statute replaces Connecticut’s limited liability company act (the “Old LLC Act”) and is based on the...more

When Can an Outside Attorney Serve as a Special Litigation Committee in an LLC Derivative Suit? When the Parties’ Contract Says...

In a decision handed down on August 15, 2017 by the New York Appellate Division First Department, the court endorsed the practice of the appointment of a Special Litigation Committee (SLC) by a limited liability company (LLC)...more

Reflecting The Parties’ Intentions In Operating Agreements: Reminder On Silent Terms

by Cole Schotz on

Does your operating agreement reflect your intentions? New Jersey’s Revised Uniform Limited Liability Company Act (the “RULLCA”) became effective on March 18, 2013. As noted in a post we authored in 2014, although initially...more

Episode 014: Business Divorce Stories: Business Appraiser Tony Cotrupe and Attorney Jeff Eilender

by Farrell Fritz, P.C. on

This is the first in what I hope will be a recurring feature of this podcast featuring war stories told by business divorce professionals. In this episode we hear stories from business appraiser Tony Cotrupe (Meliora...more

Minnesota’s New LLC Act Takes Full Effect On January 1

by Fox Rothschild LLP on

An overhaul of Minnesota corporate law on limited liability companies, or LLCs, that was phased in over three years will take full effect in January 2018. The new act differs significantly from the old act, but is modeled...more

Summer Shorts: Three Must-Read Decisions

by Farrell Fritz, P.C. on

Regular readers of this blog know it’s been anything but summer doldrums in the world of business divorce, what with case law developments such as the Appellate Division’s potentially far-reaching ruling on the purposeless...more

The Second Department Suggests That “Any Lawful Business” Clauses May Be Effectively Meaningless in LLC Dissolution Cases

In actions brought by minority members to dissolve an LLC, a key inquiry is whether the LLC’s managers are unable or unwilling to permit or promote the LLC’s “stated purpose.” In many cases, an LLC’s operating agreement...more

Does Your LLC Agreement Have a Purposeless Purpose Clause?

by Farrell Fritz, P.C. on

WARNING: Contractarians may find the following post disturbing. Reader discretion is advised. Now that I’ve got your attention, consider this: Under the standard for judicial dissolution of a New York LLC prescribed in...more

Overhaul of Illinois LLC Act Provides Modernization, Increased Flexibility

by Holland & Knight LLP on

Significant changes have been made to the Illinois Limited Liability Company Act (the Act) that will impact both existing and new LLCs. These changes, which took effect on July 1, 2017, were designed in part to bring the Act...more

Tenth Circuit Upholds Confirmation Of Arbitral Award In LLC Dissolution Dispute

by Carlton Fields on

The Tenth Circuit recently affirmed a district court’s confirmation of an arbitration award in a dispute regarding the dissolution of Knowledge Strategy Solutions, LLC (“KSS”). KSS was a partnership between the professional...more

It’s a Partnership! No, It’s an LLC! No, It’s Both!

by Farrell Fritz, P.C. on

In 1981, three partners formed a general partnership to own and operate a rental property. Their partnership agreement fixed a 30-year term, to 2011. In 2003, the partners formed a new LLC maintaining the same ownership...more

Will Your Family-Owned LLC Be Required to Pay the Fair Value of a Withdrawing Member’s Interest?

by Murtha Cullina on

Family-owned businesses that are organized as limited liability companies typically reflect the terms of the company’s governance, along with the members’ financial rights and obligations, in a written operating agreement....more

Holding the Bag: Update Your Operating Agreement or Face the Tax Consequences

by Partridge Snow & Hahn LLP on

New Law – Direct Assessment of LLC Tax Liability - The Tax Equity and Fiscal Responsibility Act (“TEFRA”) has governed the procedures for auditing partnerships since 1982. Under TEFRA, if the IRS audited an LLC taxed as a...more

Important Changes To The Illinois LLC Act

by Fox Rothschild LLP on

Changes to the Illinois Limited Liability Company Act that took effect on July 1, 2017 may impact either your current Illinois LLCs or your future ventures. The changes generally conformed Illinois law more closely to a model...more

Exculpatory Provisions Under Delaware Law: Say What You Mean And Mean What You Say

Exculpation provisions in operating agreements must be carefully crafted in order to protect members, managers, directors and officers for breaches of fiduciary duties...more

Commercial Division Flags Novel Issue of Reasonable Reliance In LLC Member Battle

In PMC Aviation 2012-1 LLC et al. v. Jet Midwest Group, LLC et al., No. 654047/2015, BL221447 (Sup. Ct. Jun. 21, 2017), Commercial Division Justice Shirley Kornreich denied a motion to dismiss a fraudulent inducement claim by...more

Important Changes To Illinois LLC Act Take Effect July 1

by Fox Rothschild LLP on

Changes to the Illinois Limited Liability Company Act set to take effect on July 1, 2017 may impact either your current Illinois LLCs or your future ventures. The changes generally serve to conform Illinois law more closely...more

“Food Fight” Sequel Ends Badly for Ousted Sibling

by Farrell Fritz, P.C. on

A little over three years ago I reported on the first round of a fascinating “food fight” among four siblings, each of whom is a 25% shareholder of a Brooklyn-based, second-generation food distributor known as Jersey Lynne...more

Delaware Ruling Highlights Difference With New York Over Amending LLC Agreements

by Farrell Fritz, P.C. on

The common perception among practitioners familiar with the business entity laws of New York and Delaware is that Delaware law generally is friendlier to, and more protective of, majority ownership and management interests....more

Fiduciary Duties After Pennsylvania’s Act 170

by Fox Rothschild LLP on

As was alluded to in a prior blog post, one of the major changes that has been enacted through Pennsylvania’s Act 170 is the ability, through the operating agreement, to contractually vary fiduciary duties of members and...more

Assignment of LLC Interest Defeats Standing Despite Alleged Lack of Consideration

by Farrell Fritz, P.C. on

The rules of “standing” in business divorce litigation generally require that the plaintiff have an ownership interest in the business entity at the time of the alleged wrongful conduct and, for derivative claims brought on...more

Business Law Update - May 2017

by Barley Snyder on

Through June 19, the Pennsylvania Tax Amnesty Program will waive all penalties and slash the interest rate on outstanding tax delinquencies that existed as of the end of 2015. Both the state and the Pennsylvania Department of...more

The Limited Liability Company Agreement That Has No Name

by Allen Matkins on

Practitioners under California’s Revised Uniform Limited Liability Company Act will be familiar with the concept of an “operating agreement” (Cal. Corp. Code § 17701.02(s)). Indeed, I expect that nearly every LLC formed...more

New District of New Jersey Case Shows Importance of Requiring Drivers to Form Corporate Entities in Misclassification Cases

by Genova Burns LLC on

Late last month, District of New Jersey Judge Robert B. Kugler partially granted FedEx Ground Package Systems Inc. (“FedEx”)’s Motion to Dismiss in a trucking misclassification case. The court dismissed several claims but...more

Business Divorce Nation: Five States, Five Cases

by Farrell Fritz, P.C. on

It’s true that the statutory and common-law rules at play in business divorce cases can vary widely from state to state. But it’s also true that court decisions in one state can influence courts in other states, and can...more

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