Category: LLC Cases

DELAWARE CORPORATE CASE RELEVANT TO LLCS

By , November 14, 2018 4:09 pm

The controlling members of LLCs often want to obtain waivers from minority members of their statutory appraisal rights.  Under the link below is a useful post about a recent Delaware case addressing the validity of these waivers under Delaware corporate law; but the reasoning and holding in the case is readily applicable to LLCs—and not only in Delaware but also, I suspect, in many other states.

Here’s the link:  https://www.pepperlaw.com/publications/contractual-waivers-of-appraisal-rights-declared-valid-under-delaware-law-2018-10-05/

LLC MANAGER SEEKS TO SUE HIS LLC’S LAW FIRM FOR MALPRACTICE

By , November 2, 2018 1:07 pm

LLC managers who want to sue their LLC’s law firm for malpractice, and the LLCs and members, should first read the following case:

Reynolds v. Henderson & Lyman et al., No. 17-1999, 2018 WL 4348013 (7th Cir. Sept. 12, 2018).  The basic lesson:  Manager can’t sue on his own behalf unless the LLC’s law firm is also the manager’s law firm.

WHEN TWO OR MORE PERSONS ARE WORKING TOGETHER, ARE THEY PARTNERS IN A PARTNERSHIP EVEN IF THEY DON’T KNOW IT?

By , March 21, 2018 2:39 pm

The above question is addressed in a recent New York appellate case discussed by Peter Mahler in a post under this link:

https://www.nybusinessdivorce.com/2017/10/articles/partnerships/calling-organization-partnership-doesnt-make-one-not-calling-partnership-doesnt-make-not-one-got/

AGREEMENT TO NEGOTIATE

By , September 11, 2017 4:10 pm

LLC lawyers, like all other business lawyers, find themselves dealing from time to time with agreements to negotiate, as entered into by their clients or other persons.  The post under the link below discussed a recent Delaware case holding the agreement to negotiate in issue in that case to be invalid.  The case seems to me to have implications in most or all non-Delaware jurisdictions

Here’s the link:  https://delawarechancery.foxrothschild.com/case-summaries/chancery-denies-relief-under-agreement-to-negotiate/?utm_source=Fox+Rothschild+-+Delaware+Chancery+Law+Blog&utm_campaign=96e6e7ad79-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_86821ff155-96e6e7ad79-70733165

MEMBER-MANAGEMENT COMPENSATION

By , August 31, 2017 1:56 pm

The case discussed in the post under the attached link concerns the payment of compensation to shareholders of close corporations, and the case is a Delaware case.  However, the case applies equally to the payment of manager compensation to members of multi-member LLCs.

Here’s the link:  http://www.nybusinessdivorce.com/2017/08/articles/delaware/navigating-rocky-shoals-safe-harbors-board-members-fix-compensation/

“PROPER PURPOSE”

By , June 19, 2017 1:34 pm

When non-manager members have disputes with managers, the access of the non-managers to LLC records is often a key issue.  The issue is whether the non-member members have a “proper purpose” for obtaining those records.  The post under the link below discusses a Delaware Court of Chancery case about that issue.

Here’s the link:  https://delawarechancery.foxrothschild.com/books-and-records-demand-2/chancery-finds-that-mismanagement-exists-warranting-section-220-books-and-records-demand/?utm_source=Fox+Rothschild+-+Delaware+Chancery+Law+Blog&utm_campaign=c83185548b-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_86821ff155-c83185548b-70733165

DELAWARE SUPREME COURT DECISION ABOUT IMPLIED COVENANT

By , March 9, 2017 2:36 pm

The judicial doctrine called the implied contractual covenant of good faith and fair dealing looms over every multi-member LLC operating agreement.  Delaware has a far more extensive body of case law on the Implied Covenant than any other state, and this case law is likely to be persuasive in many other states. The link below discusses an important Delaware Supreme Court Implied Covenant case.

Here’s the link: https://delawarechancery.foxrothschild.com/mergers-and-acquisitions/delaware-supreme-court-addresses-the-implied-covenant-of-good-faith-and-fair-dealing/?utm_source=Fox+Rothschild+-+Delaware+Chancery+Law+Blog&utm_campaign=580be6649c-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_86821ff155-580be6649c-70733165

TOP 10 2016 BUSINESS DIVORCE CASES

By , January 11, 2017 6:38 pm

If, like me, you’re a fan of Peter Mahler’s remarkable weekly bog posts on business divorce cases, you’ll find his most recent post, under the link below, a useful review of his past year of posts.  It’s about his choice of the top ten 2016 business divorce cases.

Here’s the link:

http://www.nybusinessdivorce.com/2016/12/articles/annual-top-10-cases/top-10-business-divorce-cases-2016/

NY CASE ABOUT RIGHT OF SHAREHOLDERS TO INSPECT RECORDS OF CORPORATE SUBSIDIARY-SIGNIFICANCE FOR LLCS

By , January 6, 2017 4:03 pm

Under the link below is a post by Peter Mahler about a recent decision by a New York appellate court holding that the shareholders of a NY corporation had a common law right to inspect the books and records of a wholly owned subsidiary of that corporation.  Not just in NY but also in other states, this case is likely to be useful to LLC lawyers whose clients want to inspect the books and records of single-member LLCs and other subsidiaries of multi-member LLCs of which these clients are members.

Here is the link:

http://www.nybusinessdivorce.com/2016/10/articles/access-to-books-and-records/ruling-upholds-shareholders-right-inspect-subsidiarys-books-records/

LLC-RELATED DEALS INVOLVING MULTIPLE LEGAL DOCUMENTS

By , December 9, 2016 4:57 pm

LLC formations often involve multiple documents, especially if these formations involve passive investments that require federal securities compliance documents or if they involve holding company/operating company structures.  The November 14, 2016 decision of the Delaware Supreme Court  under the link below addresses, among other issues, how to determine the relative rank of multiple interrelated LLC documents in a single, complex deal extending over a significant period of time.

Here’s the link:

https://gallery.mailchimp.com/27d7d107b7ca58cf04799f740/files/Finger_Lakes_Capital_Partners_LLC_v._Honeoye_Lake_Acquisition_LLC.pdf