News & Analysis as of

Operating Agreements Judicial Dissolution Contract Terms

Farrell Fritz, P.C.

New Year, New Law – New Opacity – for LLC Owner Disputes

Farrell Fritz, P.C. on

New York’s appellate courts are breaking new ground in 2025. Until a month ago, I would have said that “deadlock” most certainly is not enough on its own to dissolve a New York LLC....more

Farrell Fritz, P.C.

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

Farrell Fritz, P.C. on

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.

And a Time to Every Purpose Under . . . the Operating Agreement?

Farrell Fritz, P.C. on

It’s a bit of a stretch to suggest that King Solomon prophesied the standard for judicial dissolution of LLCs, but there it is: under New York’s judicially construed standard for involuntary dissolution under Section 702 of...more

Farrell Fritz, P.C.

Anti-Dissolution Provisions and Public Policy

Farrell Fritz, P.C. on

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

Farrell Fritz, P.C.

Disguised Agreements and Dissolution

Farrell Fritz, P.C. on

Appearances can be deceiving. - That, essentially, was the argument made in two recently decided cases involving claims for judicial dissolution. ...more

Farrell Fritz, P.C.

Summer Shorts: Business Divorce Cases From Across the Country

Farrell Fritz, P.C. on

Welcome to this 11th annual edition of Summer Shorts! This year’s edition features brief commentary on half a dozen business divorce cases of interest from across the country. ...more

Farrell Fritz, P.C.

Holes in Shotgun Buy-Sell Agreement Keep Deadlock Dissolution Petition Alive

Farrell Fritz, P.C. on

Under both New York and Delaware law, members of an LLC may petition for judicial dissolution on the grounds that the management is so hopelessly deadlocked that the LLC can no longer function in accordance with its purpose...more

Farrell Fritz, P.C.

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

Farrell Fritz, P.C. on

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

Farrell Fritz, P.C.

The Purposeless Purpose Clause Rides Again

Farrell Fritz, P.C. on

“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.

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

Farrell Fritz, P.C. on

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.

The Perils of Indeterminate LLC Membership Interests

Farrell Fritz, P.C. on

Here we go again — and again and again. On numerous prior occasions I’ve written about judicial dissolution cases and other infighting among LLC members featuring disputes over membership percentages. ...more

Farrell Fritz, P.C.

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

Farrell Fritz, P.C. on

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.

Pave Paradise, Put Up a Purposeful Parking Lot

Farrell Fritz, P.C. on

Parking lots breed partnership disputes. I’ve litigated them and I’ve written about them, most notably the Kassab saga. I suppose it’s the untapped development potential of parking lots, especially in flourishing downtown...more

White and Williams LLP

Delaware Chancery Court Relies Upon Judicial Dissolution Power to Break Management Deadlock

White and Williams LLP on

Shareholder agreements and operating agreements contain a variety of knobs and levers, many of which a company’s founders hope never to invoke. Chief among them are the provisions for resolving disputes or deadlocks in...more

Farrell Fritz, P.C.

Judicial Dissolution and the Weaponized LLC

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.

Gymnastics Business Falls Off the Beam in LLC Dissolution Case

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

Farrell Fritz, P.C.

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

Farrell Fritz, P.C. on

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

Patterson Belknap Webb & Tyler LLP

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

Farrell Fritz, P.C.

Does Your LLC Agreement Have a Purposeless Purpose Clause?

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

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