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.
Below are the citation and first couple of sentences of an article about addressing possible bankruptcies in LLC operating agreements. Every LLC lawyer should be familiar with the key points in the article.
Here are the cite and sentences:
2018-JAN Bus. L. Today 1
Business Law Today
Brett S. Theisen
Copyright © 2018 by the American Bar Association; Brett S. Theisen
PUBLIC POLICY PROHIBITS CONTRACTUAL RESTRICTIONS ON AN LLC’S RIGHT TO FILE BANKRUPTCY
- Enforceability of bankruptcy restrictions is a matter of federal law.
- In Lexington Hospitality, the LLC’s original operating agreement contained no limitations on its manager’s and/or members’ ability to file bankruptcy on the LLC’s behalf.
- Parties to an operating agreement generally have the freedom to contract limited only by the parameters in the relevant articles of organization and statutory law.