Today’s post in the excellent blawg entitled “Business Law Divorce” makes clear the paramount importance of drafting dissolution provisions in LLC operating agreements with great care. The link is https://www.nybusinessdivorce.com/2022/08/articles/summer-shorts/summer-shorts-llc-dissolution-and-other-recent-decisions-of-interest/.
In many LLC operating agreements, provisions that give the manager or one or more members the right to request or require some or all members to make additional contributions of capital to the LLC (“capital calls”) after the LLC’s formation in order to meet current or anticipated needs are among the most important provisions in the agreement. The latest post in the excellent blawg entitled “NY Divorce,” at A Lesson In Drafting Capital Call Provisions | New York Business Divorce (nybusinessdivorce.com), provides a very helpful overview of the law and practical considerations governing capital calls.
Under the link below, the FarrellFritz law firm provides an excellent summary of two recent articles in the ABA Business Lawyer about the debate among LLC scholars and lawyers about whether internal LLC disputes should be resolved by derivate or direct lawsuits.
Here is the link: LLCs, Direct vs. Derivative Claims, and Special Litigation Committees: A Lively Debate | New York Business Divorce (nybusinessdivorce.com)
The conflict of operating agreement provisions and statutory default provisions, discussed in the new blog in the link below, can arise in many cases in which the members of a multi-member LLC seek to remove a manager.
A Two-Act Play of LLC Default Rules and Manager Removal
The attached new New York Business Divorce post addresses a “direct vs. derivative” problem that arises in litigation by LLC members against their LLCs or their managers or other members in many states. The New Hampshire LLC Act is drafted to prevent the problem, and I suspect there are at least a few other acts that do the same. But New York law—addressed in the post—is likely to be useful in many states besides New York.
Singin’ the Derivative Plaintiff Blues
In the link below, the wonderful law blawg called NY Business Divorce lists what the authors of the blawg view as the top ten business divorce cases of 2021. This list by itself may be useful to you, but I should add that the blawg website also has a superb index that makes it easy to find cases on specific LLC and closely held corporation issues important to practitioners.
Top 10 Business Divorce Cases of 2021
The new blawg from the FarrellFritz law firm under the link below addresses a New York case in which the court enforced the buy-sell provision of a corporation’s shareholders agreement triggered by the shareholders’ petition for dissolution. The case is also undoubtedly applicable to LLCs, and not only in NY but also, as least for purposes of persuasion, in other states.
Here’s the link: Look Before You Leap: Buy-Sell Agreements Triggered by a Petition for Dissolution | New York Business Divorce (nybusinessdivorce.com)
The link below is to a discussion between Peter Mahler and Susan Pace Hammil, a leading LLC scholar about the LLC business organization form as it approaches its 50th anniversary. Professor Hamill has recently published an interesting law journal article about the meaning of this anniversary. .
Here’s the link: LLCs as They Approach the 50-Year Milestone: A Conversation with Professor Susan Pace Hamill | New York Business Divorce (nybusinessdivorce.com)