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July 8, 2024
Involuntary Dissolution of LLC Denied Where Petitioner Alleged No More Than A Dispute Between Members And The Articles Of Organization Did Not Support A Risk of Deadlock
On May 15, 2024, Justice Andrew Borrok denied a petition for dissolution of a LLC by one of its two members after the relationship between the two 50-50 members had allegedly broken down. In Petition for Dissolution v. Gad Ruham, Index No. 656166/2023, the petitioner filed a special proceeding to dissolve Hoham 932 Grand Street LLC, a limited liability company formed to hold a single property located in Brooklyn, New York. The Court noted allegations in the petition suggesting the relationship between the two members had “broken down.” But it held that none of the allegations met the statutory standard for the “drastic remedy” of dissolution under Limited Liability Company Law § 702. The Court explained: Read More
January 10, 2024
Foreign LLC Doing Business in New York Lacks Capacity to Sue Unless Registered To Do Business in New York
On December 12, 2023, Justice Barry R. Ostrager of the New York County Commercial Division issued a decision in South Beach Tristar 800 LLC v. Lincoln Arts ERFR LLC, Index No. 654461/2023, holding that a plaintiff foreign limited liability company doing, but not licensed to do, business in New York lacked legal capacity to sue, but nonetheless denying defendant's motion to dismiss on the condition that plaintiff promptly register to do business in New York, explaining: Read More
November 3, 2023
First Department Finds the Sale of 100 percent of Membership Interest in an LLC is Not a “Dissolution” Under the Operating Agreement
In an Opinion, dated September 21, 2023, in Southern Advanced Materials, LLC v. Robert S. Abrams, et al., No. 2022-04949 (1st Dep’t), the First Department found that a corporate transaction involving the sale by a limited liability company of a company it owned, structured as a sale of 100 percent of the LLC’s membership interests in the target company, did not constitute a “dissolution” under the LLC’s operating agreement and Delaware law. The dispute arose when a former stakeholder in the LLC and company sought to recover a preferred return that it was entitled to upon “dissolution” of the LLC. Under the terms of the LLC’s operating agreement, a dissolution would occur upon “the disposition by the [LLC] of substantially all of its assets.” The shareholder therefore argued that the sale met this definition because the acquisition resulted in the disposition of the LLC’s assets (i.e., the target company). Read More
