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Operating Agreements Dissolution

Farrell Fritz, P.C.

Summer Shorts: An Unusual Application of LLC Law § 608 and Other Decisions of Interest

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Welcome to this 14th annual edition of Summer Shorts. This year’s edition features brief commentary on three recent decisions by New York courts in business divorce cases. The featured cases involve a suit pitting three...more

Patton Sullivan Brodehl LLP

To Moot a Statutory Buyout, LLC’s Dissolution Must be Valid Under its Operating Agreement

In 2022, The LLC Jungle covered the opinion Friend of Camden, Inc. v. Brandt in a post titled LLC Dissolution Vote Defeats Statutory Buyout. In the Friend of Camden case, the Court of Appeal held that an LLC membership vote...more

Farrell Fritz, P.C.

Did Chancery Court Just Crack Open the Door to Equitable Dissolution of LLCs?

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Delaware Chancery Court’s contractarian approach to all things LLC, embedded statutorily in Section 18-1101(b) of the Delaware LLC Act (“It is the policy of this chapter to give the maximum effect to the principle of freedom...more

Farrell Fritz, P.C.

The Legal Ramen-ifications of Dissolving a New York LLC Over Noodle Choices

Farrell Fritz, P.C. on

The last time we featured a notable decision on a claim for dissolution of a restaurant-operating LLC was in 2017, with a post by Frank McRoberts titled, “LLC’s Purpose Being Achieved?  Business Doing Fine?  Good Luck Getting...more

Farrell Fritz, P.C.

A Lifeline for the Stale “Schedule A”

Farrell Fritz, P.C. on

One need not peruse the pages of this blog for long to learn that its authors strongly advise against entering into an owners’ agreement that calls on the members to “annually” (or worse, “regularly”) update a critical aspect...more

Farrell Fritz, P.C.

Dissolution Defined: The First Department’s Recent Guidance on Interpreting Operating Agreements

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The owners’ agreement is the backbone of the closely-held business.  In intracompany LLC disputes, few things are more important than what the operating agreement has to say on the subject.  As a consequence, the pages of...more

Patton Sullivan Brodehl LLP

“Equitable Buyout” as a Remedy for LLC Wrongdoing?

In the world of LLCs, buyouts — where one member sells his/her membership interest to another member or the LLC itself — are commonplace. Buyouts generally fall into one of two categories: contractual — where the...more

Farrell Fritz, P.C.

Recent Decisions Enforce LLC Member’s Right of First Refusal, Restrict Partnership Accounting, and Allow Damages Claim for Breach...

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Someday, perhaps, I’ll find the comedic inspiration to come up with a joke that begins, “An LLC, a partnership, and a close corporation walk into a bar . . ..” Until then, I’ll have to satisfy myself with writing about an...more

Farrell Fritz, P.C.

Who Died and Made You a Member? Second Department Resurrects LLC Dissolution Petition Brought by Deceased Member’s Estate.

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One of the most difficult periods in the lifecycle of a closely-held company is the period following the death of an owner.  Apart from having to fill whatever business responsibilities the deceased owner left behind, the...more

Farrell Fritz, P.C.

Federal Courts Wade Into Business Divorce: Recent Decisions of Interest

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Our federal courts by and large are not hospitable to business divorce litigation. The two mainstays of the federal courts’ limited subject matter jurisdiction — federal question and diversity of citizenship — typically are...more

Farrell Fritz, P.C.

Anti-Dissolution Provisions and Public Policy

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In Congel v Malfitano, New York’s highest court wrote that business partners are free to include in partnership contracts practically “any agreement they wish,” including about “the means by which a partnership will dissolve,...more

Patton Sullivan Brodehl LLP

Statutory LLC Buyouts — “Fair Value” vs. “Fair Market Value”

Under section 17707.03 of California’s Revised Uniform Limited Liability Company Act, when a member sues the other members for dissolution of the LLC, the other members can exercise a statutory buyout of the suing member’s...more

Morris James LLP

Court of Chancery Stays Action for Violation of Rule against Claim Splitting Pending Resolution of a Duplicative Federal Action

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Goureau v. Lemonis, C.A. No. 2020-0486-MTZ (Del. Ch. Mar. 30, 2021) Delaware follows the modern “transactional” view of claim splitting, which bars a plaintiff from bringing bring duplicative proceedings in different courts...more

Farrell Fritz, P.C.

The Money’s There But Out of Reach for the Minority LLC Member

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Of late I’ve been ruminating on New York’s membership in the shrinking pool of states that don’t recognize oppression of an LLC minority member by the controlling members or managers as ground for judicial dissolution....more

Patterson Belknap Webb & Tyler LLP

Commercial Division Dismisses Petition to Dissolve LLCs Based on Broadly Stated Purpose Provision

In Lazar v. Attena LLC, Justice Andrea Masley of the New York County Commercial Division granted Arik Mor and Uriel Zichron’s (together, “Respondents”) motion to dismiss a petition to dissolve three limited liability...more

Farrell Fritz, P.C.

The Purposeless Purpose Clause Rides Again

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“The Company is formed for any valid business purpose” Nine seemingly benign words in the garden-variety operating agreement of a realty holding LLC. Nine words that, as one judge opined under similar circumstances some...more

Farrell Fritz, P.C.

WIll the Pandemic Be a Boon for Future LLC Dissolution Claimants?

Farrell Fritz, P.C. on

The ongoing coronavirus / COVID-19 pandemic has quite literally impacted everyone and everything in New York, including the courts, which were forced to temporarily cease non-essential functions. The result was a short-lived...more

Morris James LLP

Chancery Denies Non-Member, Non-Manager’s Bid for Equitable Dissolution of LLC

Morris James LLP on

SolarReserve CSP Holdings, LLC v. Tonopah Solar Energy, LLC, C.A. 2019-0791-JRS (Del. Ch. Mar. 18, 2020). While the Court of Chancery has recognized the concept of equitable standing to seek judicial dissolution, this...more

K&L Gates LLP

Delaware Court of Chancery Dismisses Petition for Equitable Dissolution of an LLC by a Non-Member

K&L Gates LLP on

In SolarReserve CSP Holdings v. Tonopah Solar Energy, LLC, C.A. No. 2019-0791-JRS (Del. Ch. Mar. 18, 2020), the Delaware Court of Chancery (the “Court”) dismissed a non-member/non-manager’s petition for equitable dissolution...more

Farrell Fritz, P.C.

LLC Survives Member’s Death. Dissolution Petition Doesn’t.

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In 2018, two members of a realty holding LLC sought judicial dissolution based on the death of one of the other members. The operating agreement defines a member’s death as an event of “Dissociation.”...more

Farrell Fritz, P.C.

Chicken Sh*t Bingo Fans Rejoice: The Dragpipe Saloon Survives a Dissolution Scare

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The nationwide landscape of statutes and case law governing judicial dissolution of limited liability companies exhibits more state-to-state similarity than dissimilarity....more

Farrell Fritz, P.C.

Trouble Down on the Farm: The Importance of Using Experienced Counsel When Forming an LLC

Farrell Fritz, P.C. on

It’s commonly said there are three things that matter with real estate: location, location, location. Likewise, three things matter when choosing a lawyer to set up a limited liability company: experience,...more

Patton Sullivan Brodehl LLP

Dissolving an LLC when its Purpose Fails

Most LLC Operating Agreements contain a provision describing the “purpose” of the business. These “purpose statements” can be extremely broad and open-ended, parroting the boilerplate language required to be present in the...more

Farrell Fritz, P.C.

The Purposeless Purpose Clause Makes a Comeback — Or Does It?

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The test for judicial dissolution of LLCs under LLC Law § 702, as laid down in 1545 Ocean Avenue, initially asks whether the managers are unable or unwilling to reasonably permit or promote realization of the LLC’s “stated...more

Farrell Fritz, P.C.

Read This Case. Slap Your Head. Not Too Hard.

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Having read thousands of court opinions during my 30+ years as a litigator, I’ve learned to assume that there are things going on beyond what can be gleaned from the court’s written decision, and that these hidden factors may...more

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