The excellent post under the link below addresses a situation involving a potential forced sale of LLC property upon the death of a member—a cautionary tale for any LLC lawyer.
The first line of the attached new Court of Chancery decision is as follows:
“This matter involves the withdrawal of a member from an LLC, which (per the de facto LLC agreement) entitles him to a percentage of the value of the LLC’s business, as of the time of withdrawal, as valued without the continuing services of that member.”
The new post by Peter Mahler under the link below about a recent Iowa LLC case provides yet further evidence that lawyers who lack LLC expertise shouldn’t form LLCs.
The first few lines of this tragic case:
“Four men formed a limited liability company to test a new business model for providing chiropractic services. Their enterprise was plagued by treachery and tragedy. One of the men committed fraud against the company and was forced out. A second declared personal bankruptcy, and then, with the third, allegedly created a competing business, looted the company, and then cancelled the company. The fourth man sued the second and third for those acts, but took his own life before that suit concluded.
The deceased member’s widow has sued the company, the second and third man, and their affiliated entities. She claims she is entitled to the proceeds from the life insurance policy the LLC had taken out on her husband under an agreement among the members. The enforceability of that agreement depends on, inter alia, whether the LLC had dissolved before her husband’s death. On the defendants’ motion to dismiss, I find that the dissolution provision of the company’s LLC agreement is susceptible to two reasonable interpretations. I therefore must construe the provision in favor of the plaintiff, and under that construction, her rights to the life insurance policy are not terminated by the company’s dissolution. I also conclude the plaintiff states a claim for a statutory receivership.”
You can read the case in its entirety here:
Under the link below is a good new post about an LLC dissolution. The caption of the post is: “Court of Chancery Grants Summary Judgment For Dissolution of Limited Liability Company Where Two Minority Members Failed To Purchase The Majority Member’s Limited Liability Interest, As Required By The Operating Agreement.”
Here’s the link:
Under the link below is a new and fascinating post by Peter Mahler on the important issue of deadlock among LLC members. Peter’s introduction to the post is as follows:
Can a Deadlock Resolution Provision Cause Deadlock? This One Did
By Peter Mahler on May 20, 2019 06:24 am
Last week’s decision by Chancellor Bouchard in Acela v. DiFalco involves a flawed deadlock resolution provision in an LLC agreement that not only failed to resolve deadlock, it was exploited by one side to create deadlock. Learn more in this week’s New York Business Divorce.
I recently published an article in the New Hampshire Bar News concerning the availability of section 199A deductions to New Hampshire lawyers. Since the article applies also to lawyers (and also to other professionals) in states besides New Hampshire, I’ve included a copy of the article at the link below:
Tax choice of entity is a key procedure in any LLC formation, and with the enactment of IRC section 199A, all existing LLCs should revisit tax choice of entity. The new post by Lou Vlahos of FarrellFritz under the link below contains a short but excellent post about tax choice of entity and S corporations.
The attached case is required reading for anyone interested in Delaware Limited Liability Company Act forum section issues. It’s a very thoughtful opinion.
The post under the link below addresses the issue of which LLC members or managers may validly file a petition for their LLC’s bankruptcy. The broad lesson of the post is that LLC lawyers should make sure, in each operating agreement they draft for a multi-member LLC, that this issue is clearly resolved in the agreement.