News & Analysis as of

Operating Agreements Limited Liability Company (LLC) Commercial Bankruptcy

Nelson Mullins Riley & Scarborough LLP

Tenth Circuit BAP Holds that Section 541 of the Bankruptcy Code Doesn’t Invalidate Transfer Restrictions in LLC Operating...

In a recent decision by the Tenth Circuit Bankruptcy Appellate Panel, the court held that a chapter 7 trustee could not sell an LLC membership interest pursuant to section 363 of the Bankruptcy Code because of a transfer...more

Patton Sullivan Brodehl LLP

LLC Operating Agreements Can Reduce Fiduciary Duties

LLC managers owe fiduciary duties both to the LLC and to the LLC’s members, similar to the duties owed by a partner to other partners in a partnership.  (Corp Code §17704.09.)  These include the duty of loyalty, care, and...more

Jones Day

Delaware Bankruptcy Court Rules that Bankruptcy Blocking Right in Debtor's Corporate Charter Violates Federal Public Policy

Jones Day on

Courts sometimes disagree over whether provisions in a borrower's organizational documents designed to prevent the borrower from filing for bankruptcy are enforceable as a matter of federal public policy or applicable state...more

Stinson LLP

Members and Managers of Arizona LLCs Owe Common Law Fiduciary Duties to the Company

Stinson LLP on

The Arizona Supreme Court held on Tuesday that members and managers of Arizona limited liability companies (LLCs) owe common law fiduciary duties to the company, but that an operating agreement may limit such duties except...more

Farrell Fritz, P.C.

Who Gets to Play the Bankruptcy Card Under Your LLC Agreement?

Farrell Fritz, P.C. on

If you’re a member of a multi-member LLC, and especially if it’s manager-managed, here’s a reason you might want to check under the hood of your LLC agreement: if the business goes belly up amidst squabbling or worse among...more

Mintz - Bankruptcy & Restructuring Viewpoints

Bankruptcy Restrictions in Operating Agreement Held Unenforceable

In In Re Lexington Hospitality Group, LLC, the United States Bankruptcy Court for the Eastern District of Kentucky thwarted a lender’s efforts to control whether its borrower could file bankruptcy. As a condition to the loan,...more

Carlton Fields

Tenth Circuit Upholds Confirmation Of Arbitral Award In LLC Dissolution Dispute

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

Mintz - Bankruptcy & Restructuring Viewpoints

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

Jaburg Wilk

What Are Fiduciary Duties Between Members In An Arizona LLC?

Jaburg Wilk on

A few years I wrote an article named Are There Fiduciary Duties between Members in an Arizona LLC? At the time, there were no published decisions in Arizona on this issue. However, a bankruptcy judge had dismissed my...more

BCLP

Bankruptcy Courts Closing In – Will An Agreement Requiring Unanimous Consent To File For Bankruptcy Be Effective?

BCLP on

We’ve all seen it. The business opportunity looks enticing but is laced with risk about a potential bankruptcy filing down the road. As bankruptcy lawyers we are often asked how deals can be structured to prevent a...more

Dechert LLP

Global Private Equity Newsletter - Summer 2016 Edition: Recent Developments in Acquisition Finance

Dechert LLP on

Private equity sponsors should be aware of two recent court decisions. One involves fiduciary duties under state law that may be owing to a limited liability company borrower by its managers, in the context of receivables...more

Sheppard Mullin Richter & Hampton LLP

Lenders Cannot Prevent Borrowers From Filing Bankruptcy By Owning Minority Equity With Veto Power Over Borrower’s Decision To File...

In a recent decision, the U.S. Bankruptcy Court for the District of Delaware refused to enforce a provision in the debtor’s LLC operating agreement requiring a unanimous vote of the debtor’s members to authorize the debtor to...more

A&O Shearman

Delaware Bankruptcy Court Invalidates on Public Policy Grounds a “Golden Share” Provision in LLC Agreement Designed to Limit LLC’s...

A&O Shearman on

In a June 3, 2016 decision, the United States Bankruptcy Court for the District of Delaware (“the Bankruptcy Court”) invalidated, on federal public policy grounds, a provision in the debtor-LLC’s operating agreement that it...more

Burr & Forman

Intervention Energy: The Case Where the Golden Share Lost its Shine

Burr & Forman on

In connection with out-of-court restructurings, workouts and forbearance agreements, creditors often seek to include provisions that purport to limit the ability of a debtor to file for bankruptcy relief. However, bankruptcy...more

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