LLC Provisions Regarding Directors and Managers: Delaware Decisions and Key Practice Points for Counsel
Crafting Safe Harbors, Eliminating Corporate-Type Fiduciary Duties, Implied Covenants, and More
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Corporate Law
- event Date
Thursday, December 1, 2022
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will guide corporate counsel on recent Delaware court decisions concerning LLC director and manager breach claims and best practices to avoid liability. The panel will discuss essential provisions for drafting LLC agreements, crafting safe harbors, eliminating corporate-type fiduciary duties, applying implied covenants, and other complex issues to assist counsel in avoiding litigation and claims against LLC directors and managers.
Ms. Frank focuses on corporate and business transactions including the structure and use of Delaware business entities such as corporations, limited liability companies, limited and general partnerships and statutory and common law trusts. She also assists with the representation of lenders and borrowers in commercial real estate and other financing transactions and has worked on multiple commercial real estate acquisition and construction transactions, as well as commercial loan modifications. Ms. Frank provides third-party legal opinions concerning Delaware’s General Corporation Law, Delaware’s alternative entity statutes and the Delaware Uniform Commercial Code.
Mr. Maxwell provides advice to clients on matters of Delaware corporate and business law for transactions involving alternative entities and corporations, including investment and private equity fund transactions, joint ventures, cross border transactions, mergers, acquisitions, dissolutions and restructurings. He also advises management, boards and special committees of Delaware entities on matters of operation and governance, including with respect to fiduciary duty and contractual interpretation issues. Additionally, Mr. Maxwell represents both lenders and borrowers in a variety of commercial financing transactions, including asset-based financing, real estate mortgage financings and other credit related transactions.
The number of LLCs and other pass-through entities formed in Delaware are increasing. To maximize the benefit from the advantages of an LLC structure after recent Delaware court decisions, counsel must ensure that LLC agreements precisely address (or eliminate) the obligations and duties of LLC directors and managers.
Delaware court rulings put LLC directors and managers on notice of the consequences of actions that do not comply with the terms and provisions of the company's operating agreement. These cases focused on issues such as a lack of safe harbor protections in conflicting transactions (and the failure to satisfy such safe harbors), the ambiguity of contract provisions, language suggestive of fiduciary duties beyond what is stated within the LLC agreement, the implied covenant of good faith and fair dealing, and other matters that contrast between LLC and corporate law.
In the corporate context, directors cannot disclaim fiduciary duties of care and loyalty to the corporation and its shareholders. State law may have the same standards for LLC directors and managers as a default rule. Such duties may be, and typically are, modified or eliminated by the terms of the LLC agreement to limit management's duties to those specified in the agreement or those that courts may reasonably infer under the implied covenant of good faith and fair dealing. Counsel must know the recent Delaware court decisions to identify considerations for negotiating and drafting LLC agreements.
Listen as our panel discusses recent Delaware court decisions regarding LLC agreements, critical issues regarding directors and managers, and key points and best practices in drafting provisions to avoid breach claims in light of recent cases.
- Recent Delaware court decisions regarding LLC directors and managers
- Critical provisions in drafting LLC agreements to limit breach claims and liability
- Methods in eliminating corporate-type fiduciary duties and crafting safe harbors
- Application of implied covenants and guidance on other issues to assist counsel
- Best practices for avoiding and managing breach claims for counsel
The panel will review these and other critical issues:
- Identifying essential issues from recent Delaware court decisions regarding LLC agreements
- Drafting modern forms of LLC and LP agreements
- Fiduciary disclaimer provisions in LLC and LP agreements
- Recognizing exculpation or indemnification provisions that may suggest fiduciary duties and crafting such provisions carefully to avoid such suggestion
- Methods of providing safe harbors for conflicted transactions
- Avoiding ambiguity and unintended consequences in the interrelationship of provisions
- Defining the standards of conduct
- Application of the implied covenant of good faith and fair dealing
