Hostile LLC Breakups: Pre-Suit Planning and Litigation Tactics When Exiting an LLC With Archaic Documents
Navigating Ambiguous, Repealed, or Modified Remedies
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Class Action and Other Litigation
- event Date
Tuesday, March 25, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE webinar will discuss pre-litigation and litigation planning issues and tactics that a member desiring to exit a company should consider when the controlling member(s) has ceased making distributions or is denying access to the company's books and records. The program will have a special focus on companies formed in the early days of LLCs where the member interests have been inherited or transferred to a second generation that may have no interest or competence in the business of the LLC.
Mr. Clingen chairs the firm’s business counseling department. He is general counsel to a number of privately owned businesses across a variety of industries and also represents high net worth individuals and family offices. He counsels clients in starting new business ventures, operating their ongoing business enterprises and preparing business succession plans for business owners.
Mr. Kosek is a shareholder in Anderson Kill's New York office. He assists clients in a broad array of issues, including insurance coverage, regulatory, FCPA, labor law, negligence, nuisance, trespass, products liability and breach of contract, with a focus on construction and regulatory matters.
Mr. Lazere is a shareholder in Anderson Kill’s New York office and also serves as the firm's Deputy General Counsel. He focuses his practice on Corporate and Commercial Litigation at the trial and appellate levels in state and federal court. Mr. Lazere represents clients in sophisticated commercial and business litigations involving business torts, fraud, breach of contract, corporate and partnership disputes and debtor and creditor rights. His extensive litigation experience encompasses business arenas including real estate, construction, aviation, hospitality, maritime, media, technology, finance and insurance.
When limited liability companies were first gaining widespread traction generations ago, LLC operating agreements were often created with form templates of the time that contained few or no mechanisms for providing an exiting member with the fair value of the membership interests or for resolving membership disputes. As long as the original members were running things, this arrangement was not an issue. But now, sometimes several decades after formation of an LLC, the membership interests have been passed on to a second or even third generation who no longer wish to continue in the business or with the current members.
Disputes often result in the controlling member(s) stopping distributions or denying other members access to the company's books and records. When an excluded member wishes to withdraw or otherwise enforce their rights under these circumstances, careful negotiation and pre-litigation planning are required. When the members are related or have ongoing connections, emotions play a large role.
Where the operating agreement is silent, and many older OAs are, the parties' rights and remedies are defined by statute, which can be ambiguous and untested and may implicate laws that have since been amended or modified. If disputes appear headed to litigation, however, many complex issues need to be considered, and alternative plans and strategies need to be considered before suit is filed.
Listen as our experienced panel discusses how to navigate exiting an LLC with outdated operating agreements or under the statutory default procedures where the member interests may be owned by second or third generation owners.
- Introduction
- What provisions are most likely to have been omitted
- Why were they likely omitted
- Common exit mechanisms in older operating agreements
- Statutory default rules
- Obtaining documents
- Exit rules
- Tactics for members desiring to exit
The panel will review these and other key issues:
- What options exist when laws referred to in the operating agreement have been amended or even repealed?
- What are practical ways to open negotiations without exacerbating difficult emotions?
- What modern business maneuvers, not in existence when the OAs were created, pose the most challenges?
Related Courses
Authenticating Disputed E-Signatures at Trial: ESIGN and UETA, Experts, Burdens of Proof, Audit Trails
Friday, February 28, 2025
1:00 p.m. ET./10:00 a.m. PT
Concurrently and Ethically Representing Companies, Owners, and Employees in the Same Matter
Monday, May 19, 2025
1:00 p.m. ET./10:00 a.m. PT