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.
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.
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
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
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:
The recent decision of the Delaware Court of Chancery under the link below provides an important clarification about how the term “sole and absolute discretion” should be interpreted in Delaware LLC agreements. I suspect courts in other jurisdictions would rule similarly.
Here’s the link:
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:
Sometimes a profitable business may want to share its profits with its owners; can’t readily do so with payments in the form of cash payments; but can do so by distributing company property to them that will have immediate value to them. The post under the link below provides a brief but excellent discussion of this situation. Briefly: Multi-member LLCs and other entities that are taxable as partnerships can make these payments tax-free; entities taxable as C and S corporations can’t.
The link to Peter Mahler’s latest post is https://www.nybusinessdivorce.com/2020/02/articles/expulsion-and-removal/the-curious-case-of-the-expelled-llc-member-bound-by-operating-agreement-he-never-signed/ The title of the post tells it all:
The Curious Case of the Expelled LLC Member Bound by Operating Agreement He Never Signed
In the 1990’s, I regularly published a column in the Concord Monitor, my home-town newspaper, about business law and tax. The title was “Law in the Marketplace.’ Today I resumed publishing that column. The link to the first new column is https://www.concordmonitor.com/John-Cunningham-32358675. The title to the column is “Tips When Starting Up.”
Peter Mahler has described his latest post in “New York Business Divorce” as follows:
This week’s New York Business Divorce highlights an interesting decision by Commercial Division Justice Andrea Masley addressing claims that the minority members of an LLC breached the operating agreement’s anti-withdrawal provisions by demanding a buyout and bringing a damages suit against the managing member.
Needless to say, the post, although it is based on a recent New York case, is likely to be of interest to LLC lawyers in many jurisdictions.
The link to the post is: https://www.nybusinessdivorce.com/2020/01/articles/llcs/a-case-of-llc-withdrawal-symptoms/