Below is the link to a fine blog post in the Delaware Commercial Litigation Blog about a recent decision in a case called Nationwide Emerging Managers, LLC v. Northpointe Holdings, LLC, No. 441, 2014 (Del. Supr., Mar. 18, 2015). The case provides, among other things, an excellent discussion of the implied contractual covenant of good faith and fair dealing, a key doctrine in negotiating and drafting LLC agreements.
Here’s the link:
Peter Mahler has deftly summarized in his latest blog post a truly horrific and still ongoing New York family business divorce. The single most important purpose of LLC operating agreements for family businesses is, to the extent humanly possible, to anticipate and prevent family feuds like this one, or, at the very least, to provide a civil means of resolving them.
Indemnification provisions are useful in many types of agreements, including operating agreements. Indeed, prospective LLC managers often insist on indemnification provisions in the operating agreements of LLCs they will manage. Below is a link to an excellent blog post by Ken Adams on the subject of indemnification provisions, plus a very good model provision.
Under the Check-the-Box Regulations, both single-member and multi-member LLCs may elect to be taxable as S corporations if they meet applicable eligibility requirements, and taxation under Subchapter S can be better for these LLCs and their members than sole proprietorship taxation or taxation under Subchapter K to reduce members’ Social Security Taxes and Medicare Taxes and for other important federal tax purposes. The latest issue of The Tax Lawyer, published by the Tax Section of the American Bar Association, contains an excellent article on Subchapter S by David R. Sicular entitled “Subchapter S at 55—Has Time Passed this Passthrough By? Maybe Not.” The cite is 68 Tax Lawyer 185 (Fall 2014).
As many of you will know, Business Law Today is a quarterly publication of the Business Law Section of the American Bar Association. It is less scholarly and formal than the ABA’s Business Lawyer, but it often publishes authoritative but practical and plain-English articles on issues of broad interest among business lawyers. The “mini-theme” of the February 2015 issue is on LLCs and other unincorporated business entities. The authors of the articles in the February issue include Bob Keatinge, Dan Kleinberger and Tom Rutledge, three of the most respected LLC scholars. Here is a link to its table of contents:
Minnesota LLC lawyers and lawyers interested in new developments in LLC statutory law may find it useful to read the above article. The cite is:
Larson and Nelson, “Minnesota’s LLC Makeover,” 72-FEB Bench & B. Minn. 20 (February 2015)
The very recent decision of the Delaware Court of Chancery in Pulieri v. Boardwalk Properties, LLC, C.A. No. 9886-CB (Del. Ch. Feb. 18, 2015) illustrates how important it is that LLCs with significant financial stakes have written (not oral) operating agreements. Click here for a cite of the case and for a transcript and excellent summary of it:
LLC statutes impose far fewer statutory formalities on LLCs than corporate statutes do on state-law business corporations. However, LLCs can nevertheless be liable for veil-piercing for failure to maintain statutory formalities. For a discussion of this issue, click here: http://www.nybusinessdivorce.com/2015/03/articles/llcs/llc-formalities-that-matter-guest-post-by-professor-daniel-kleinberger/#more-13264.
The implied contractual covenant of good faith and fair dealing is central in drafting operating agreements for multi-member LLCs under any LLC act. Below is a cite to an insightful law student note about the covenant in the most recent issue of law review of the Law School of the University of Arkansas (Little Rock). The note is relevant not only to Arkansas LLC lawyers but to LLC lawyers nationwide.
Here’s the cite:
Kathleen Lestage, “Contract Law – No Faith in Arkansas’s Approach to the Implied Contractual Covenant of Good Faith—Arkansas Research Medical Testing, LLC v. Osborne, 2011 Arkansas 158, 2011 WestLaw 1423993,” 36 U. Arkansas Little Rock L. Rev. 653 (Summer 2014).