Category: Member Buy-Outs

BUY-SELL PROVISION AS A CALL OPTION

Whenever you draft a buy-sell provision in an LLC operating agreement, you want to consider whether it’s also, effectively, a call provision.  The new post from Peter Mahler’s blawg under the link below addresses a recent Delaware Court of Chancery case on this issue.

Here’s the link:  https://www.nybusinessdivorce.com/2020/06/articles/buyout/consider-whether-your-buy-sell-provision-is-a-call-option-before-pulling-the-trigger/

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

 

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/

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/

BUY-OUT OF MEMBER ELEVEN YEARS AFTER MEMBER’S DEATH

Peter Mahler’s latest post—as usual, an excellent one—addresses a very recent New York appellate decision concerning a potential buy-out of a deceased member of a real estate holding company LLC—11 years after the member’s death!   The facts are weird but the case nevertheless holds many lessons for LLC lawyers drafting buy-sell provisions for deceased LLC members.

Here’s the link:

https://www.nybusinessdivorce.com/2019/11/articles/operating-agreement/llc-survives-members-death-dissolution-petition-doesnt/