News & Analysis as of

Operating Agreements

Farrell Fritz, P.C.

Judicial Dissolution and the Weaponized LLC

by Farrell Fritz, P.C. on

What’s a weaponized LLC? It’s one whose operating agreement gives the controlling majority members the authority to dilute, remove from management, or expel a non-controlling minority member, typically for failing to satisfy...more

Farrell Fritz, P.C.

Repeat After Me: You May Not Expel a Member of a New York LLC Unless the Operating Agreement Says So

by Farrell Fritz, P.C. on

C’mon, New York lawyers, do you really want to spend your time, your client’s money, and bother the court litigating a dead-end claim that your client rightfully expelled his or her LLC co-member for alleged misconduct,...more

Holland & Knight LLP

STB Nudges Parties Toward Settlement of Chicago Union Station Dispute

by Holland & Knight LLP on

A federal agency has, for the time being at least, refused to intervene in a dispute between Amtrak and Metra over Metra’s use of Chicago Union Station. Back in April, this blog reported on a budding conflict between...more

Bass, Berry & Sims PLC

Chris Lazarini Analyzes Presumption of Fraud in Case Involving Advisor's Effort to Avoid Paying a Promissory Note

by Bass, Berry & Sims PLC on

Bass, Berry & Sims attorney Chris Lazarini analyzed a case in which a former investment advisor at UBS sought to prevent the company from collecting on promissory notes the advisor owed to UBS upon his departure. After the...more

Cadwalader, Wickersham & Taft LLP

Delaware Chancery Court Orders Venture Capital Firm To Increase Terminated LLC Member’s Payout In Post-Trial Opinion

On August 13, 2018, Vice Chancellor Travis Laster of the Delaware Court of Chancery ordered Domain Associates, LLC (“Plaintiffs,” “Domain,” or the “Firm”), a venture capital firm, to pay its former member, Nimesh Shah...more

Farrell Fritz, P.C.

Gymnastics Business Falls Off the Beam in LLC Dissolution Case

by Farrell Fritz, P.C. on

Very few and very far between are cases in which the holder of a minority membership interest in a New York LLC — with or without a written operating agreement — prevails in an action brought under section 702 of the New York...more

Carlton Fields

New York Federal Court Confirms Arbitration Award

by Carlton Fields on

The background and full procedural history of this case can be found here. In sum, the dispute stems from a 2011 agreement by KT Corporation and KTSAT Corporation (“KT”), a Korean satellite communications provider, to sell...more

Morris James LLP

Federal District Court Explains Incorporation By Reference Rules

by Morris James LLP on

Askari v. Pharmacy Corporation of America, C.A. 16-1123-RGA (D. Del. August 8, 2018) - It is not always clear when two agreements are to be read as one. This is because incorporating one agreement into a second agreement...more

Farrell Fritz, P.C.

Dissension Follows When Business Owners Don’t Put Their IP House in Order

by Farrell Fritz, P.C. on

When you think about protecting a business firm’s intellectual property (IP), usually you think about protecting it from infringement by external actors. But there also are internal threats — even mortal ones — to the...more

Thompson Coburn LLP

The benefits of a business ‘prenup’: A litigator’s perspective

by Thompson Coburn LLP on

A prenuptial agreement may be a bit of a loaded concept when it comes to marriage, but it shouldn’t be when it comes to your business relationships. Strong, well-written shareholder and operating agreements are the...more

Farrell Fritz, P.C.

Lessons From a Trio of Dysfunctional Buy-Sell Agreements

by Farrell Fritz, P.C. on

Three recent court decisions from three different states — New York, Pennsylvania, and Alabama — add to the rogue’s gallery of valuation cases stemming from poorly conceived and/or poorly implemented buy-sell agreements among...more

Patterson Belknap Webb & Tyler LLP

Speak Now? The Ninth Circuit Weighs in on Appellate Standing

A recent decision from the Ninth Circuit Court of Appeals highlights an existing circuit split regarding appellate standing. Courts in the Fourth and Seventh Circuits have disagreed whether objection and attendance at a...more

Murtha Cullina

MA SJC Rules on Merger-Related Fiduciary Duties

by Murtha Cullina on

Many operating businesses in Massachusetts are set up as limited liability companies rather than corporations. Limited liability companies can engage in many of the same activities as corporations, including participating in...more

Eversheds Sutherland (US) LLP

“Phase two” for private BDCs - SEC permits liquidity for investors through split-off transaction

Private business development companies (BDCs) do not have publicly traded shares. For investors in these vehicles, liquidity opportunities take a number of forms....more

Farrell Fritz, P.C.

Anyone Think Binding Mediation to Break Deadlock Is a Good Idea?

by Farrell Fritz, P.C. on

Mediation, as commonly understood in the context of alternative dispute resolution, employs a neutral third party to facilitate negotiation and voluntary agreement between the parties. Unlike arbitration, the mediator does...more

Morris James LLP

Self-Dealing Conduct Supporting Fiduciary-Duty Claims Was Covered by Contractual Duties Imposed in the LLC Agreement

by Morris James LLP on

The Delaware Limited Liability Company Act’s policy is to give the maximum effect to the principle of freedom of contract in LLC operating agreements. The act permits parties to eliminate common-law fiduciary duties, and...more

Morris James LLP

Court Of Chancery Applies LLC Contractual Fiduciary Duty

by Morris James LLP on

MHS Capital LLC v. Goggin, C.A. No. 2017-0449-SG (May 10, 2018) - Alternative entity agreements may eliminate common law fiduciary duties and often do, supplanting them with contractual fiduciary duties....more

Verrill Dana LLP

Lawyers on Tap: Tap Tips for Entity Formation and Taxation

by Verrill Dana LLP on

In this episode of Verrill Voices: Lawyers on Tap, Verrill Dana attorneys Jennifer Green and Jonathan Dunitz discuss the importance of entity formation to the overall success of a brewery business, and the differences between...more

Farrell Fritz, P.C.

If LLC Agreement Must Be In Writing, Must It Be Signed?

by Farrell Fritz, P.C. on

Transactional lawyers who assist clients in the formation and restructuring of business entities, and the litigators who clean up the transactional lawyers’ occasional messes, each have lessons to learn from last week’s...more

Farrell Fritz, P.C.

Can LLC Agreement Waive Right to Sue Derivatively? Not in These Two Cases

by Farrell Fritz, P.C. on

Recently, in two separate cases, two New York judges construing two LLC agreements of two LLCs formed under the laws of two different states — Delaware and Nevada — came to the same conclusion when faced with the same...more

Patterson Belknap Webb & Tyler LLP

Commercial Division Holds That Agreement That Specifies Dilution as Remedy for Failure to Make Capital Call Prohibits Plaintiff...

Operating agreements often specify dilution as the remedy for a failure to make a capital contribution. But what if your business partner fails to make a contribution and you’d rather have the capital than an increased...more

Farrell Fritz, P.C.

Operating Agreement Dooms Derivative Claims by Deceased LLC Member’s Estate

by Farrell Fritz, P.C. on

In business divorce litigation, petitioners / plaintiffs often want to start the case with a bang. A common tactic is to file a petition / complaint simultaneously with an injunction motion. Often there is a real need for an...more

Thompson Coburn LLP

[Webinar] Partnership Audit Rules; Effects of Tax Reform; Using a Business Entity to Help Defray Fees - April 24th, 12:00pm CT

by Thompson Coburn LLP on

New partnership audit rules require a fresh look at the process of selling a partnership interest and partners’ relationships when an audit occurs. Separately, tax reform provides new income tax planning opportunities for...more

Norris McLaughlin, P.A.

What Happens When Equal Shares Does Not Mean Equal Power?

by Norris McLaughlin, P.A. on

In my last blog post, I explored the issue of equal pay among co-equal business partners, and how equal pay disputes can be remedied. In this article, I look at the same issue from a slightly different perspective – whether...more

WilmerHale

In Case You Missed It: Launch Links - April, 2018

by WilmerHale on

Some interesting links we found across the web this week: The 20% Rule: The Guiding Principle for Startups This article from Forbes shares one founder’s advice to add 20% to certain parts of a business plan....more

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Updates to This Policy

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