LLC DISSOLUTIONS AND COVID-19

The latest post in the excellent blawg entitled “New York Business Divorce” contains an excellent discussion of a very recent New York trial court decision that addresses, among many other issues important to LLC lawyers, the issue (addressed in a footnote) of the impact of the Coronavirus Pandemic on the availability of dissolution remedies to members of LLCs harmed by the pandemic.

Here’s the link to the post:

https://www.nybusinessdivorce.com/2020/05/articles/dissolution-basics/will-the-pandemic-be-a-boon-for-future-llc-dissolution-claimants/

“SOLE AND ABSOLUTE DISCRETION”

Peter Mahler introduces his latest post in “New York Business Divorce” as follows:

“Is there such a thing as a contractually-infused, common-law fiduciary duty that can override an LLC manager’s “sole and absolute discretion”? Decide for yourself when you read this week’s New York Business Divorce.”

In many operating agreements of multi-member LLCs, the issue Peter addresses is major.

Here’s the link to his post:

https://www.nybusinessdivorce.com/2020/05/articles/llcs/when-an-llc-managers-sole-and-absolute-discretion-is-neither-sole-nor-absolute/

IRREVOCABILITY OF LLC MEMBER BUY-OUT RIGHT

The very recent Delaware Court of Chancery case discussed under the link below is yet additional evidence that if you want any specific buy-out right or other right in an operating agreement to be revocable, the operating agreement must explicitly so provide.

https://www.lexology.com/library/detail.aspx?g=51b78f76-8db1-4696-b7b2-610b817b3a02&l=8UX9J5Q

 

WHAT HAPPENS WHEN WIFE SUCCEEDS TO DECEASED HUSBAND’S MEMBERSHIP IN 50/50 LLC?

A major lesson of the post by Peter Mahler under the link below is that a multi-member LLC operating agreement must be very clear as to the management of the LLC when a spouse dies and the surviving spouse succeeds to the deceased spouse’s management rights.

Here’s the link:  https://www.nybusinessdivorce.com/2020/03/articles/arbitration-and-mediation/no-laughing-matter-deadlock-dissolution-petition-targets-legendary-nyc-comedy-club/

POST-BUY DISTRIBUTIONS IN LLC MEMBER BUY-OUT

The link below is to the latest post by Peter Mahler, in which he addresses a recent New York state case in which  a bought-out LLC member tried but failed to receive distributions over and above the buy-out price.   The case suggests (to me, at least) that it may sometimes be useful to address this issue in operating agreements.

Here’s the link:  https://www.nybusinessdivorce.com/2020/03/articles/advancement-and-indemnificatio/no-double-dipping-court-denies-post-valuation-date-distributions-in-equitable-buyout-of-llc-member/

ARTICLE ON LOW-PROFIT LLCS

The article cited below will be of interest to all LLC lawyers.  I’ve discovered it on WestLaw, but it may also be available elsewhere.

Here’s the cite:

104 PRAC. TAX STRATEGIES 04
Practical Tax Strategies
**1
March, 2020
Low-Profit Limited Liability Company
Copyright (c) 2020 RIA
Kelsey Feldmeier, Cindy Lee, and Ken Milani
THE LOW-PROFIT LIMITED LIABILITY COMPANY: A LIFELINE TO STRUGGLING INDUSTRIES

 

LIABILITY OF FORMER MEMBERS TO BUY-OUT THIRD MEMBER’S INTEREST

Under the link below is a scary recent PLLC ruling by a NY court, as discussed by Peter Mahler of the FarrellFritz law firm in his latest post.  Peter summarizes his post as follows:

This week’s New York Business Divorce examines a noteworthy decision by Justice Richard Platkin involving the break-up of a law firm organized as a professional services limited liability company, in which the court addressed the potential liability of two members to buy out a third member’s interest after they withdrew from the firm.

Here is the link:

https://www.nybusinessdivorce.com/2020/03/articles/professionalservicellcs/forced-to-buy-out-law-partners-interest-in-defunct-firm-years-after-withdrawing-it-can-happen/

TRANSFER RESTRICTIONS AND ASSIGNMENT OF LLC INTERESTS

Peter Mahler of the FarrellFritz law firm summarizes his latest post from his New York Business Divorce website as follows:

“The Appellate Division, Second Department’s ruling last month in Berhend v. New Windsor Group, LLC illustrates the disastrous results when care is not taken by the assignee of an LLC interest to determine the validity of the assignor’s interest and the existence of transfer restrictions in the LLC’s operating agreement.”

The importance of the post to every LLC lawyer is self-evident.

Here’s the link to Peter’s post:

https://www.nybusinessdivorce.com/2020/03/articles/llcs/always-check-provenance-before-taking-an-assignment-of-llc-interest/