The excellent new blog under the link below addresses the often challenging issue of properly drafting operating agreement terms for transfers of LLC memberships upon members’ deaths.
The new post in the excellent blawg entitled New York Business Divorce is under the link below. Its author introduces the post as follows:
In this week’s New York Business Divorce, we tackle two important legal issues for LLC owners. First, the circumstances in which an upon-death membership interest transfer provision in an unsigned, non-final operating agreement may be enforced. Second, whether a membership interest transfer provision in an operating agreement trumps a conflicting bequest in a last will and testament.
Under the link below is a new post by Peter Mahler relevant to all too many LLC clients. Peter summarizes the issue in the post as follows:
The interaction between an LLC’s operating agreement and a subsequent, informal deal between the members raises difficult questions surrounding the enforceability of either agreement. In a recently-filed Manhattan Commercial Division case, the Court granted the plaintiff a preliminary injunction, signaling to the parties that the plaintiff was likely to succeed on his claim to enforce the informal deal notwithstanding arguably contrary provisions in the operating agreement. The case reminds us that the formality requirements of an LLC operating agreement may give way to an informal agreement when both LLC members manifest their intent to be bound by the informal agreement
Here is the link:
The post from Peter Mahler under the link below is about a recent NY LLC case upholding the validity of a bare-bones expulsion clause in the operating agreement of a NY multi-member LLC. The decision is well-reasoned, but in my view, because expulsions are major LLC actions, they should be addressed in detail in operating agreements.
Here’s the link:
Under the link below is a new and excellent post by Peter Mahler in his NY Business Divorce blawg about the dangers that lurk in broad purpose clauses in LLC operating agreements.
Here’s the link:
Under the link below is an excellent new post from Peter Mahler about the important subject of the validity of oral amendments to LLC agreements and other agreements among business owners. Here’s the link:
There are nine such provisions—namely, provisions that:
- Identify the members and managers;
- State the members’ duties to make contributions of cash, property or services to the LLC;
- State the members’ rights to share in LLC income and losses;
- Define the events that will cause the members to cease being members (e.g., death or resignation) and the buy-outs or other consequences of these events;
- Define the LLC’s management structure,
- Define the members’ voting power;
- Require unanimous member votes for admissions of new members;
- Impose comprehensive fiduciary duties on the members and managers; and
- Provide for dispute resolution by mediation, arbitration or litigation.
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.
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:
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/