Key Takeaways Start with the operating agreement: In most New Jersey LLC disputes, the operating agreement controls whether and how you can remove an LLC member. Removal is rarely “simple”: Expelling a member often involves voting procedures, notice requirements, and a structured buyout or separation plan. Document the conflict... read more
A ‘passive’ member with no rights or responsibilities in the management of a limited liability company cannot be held liable for refusing to participate in a PPP loan application. Dissociated LLC members with no management rights can withhold their voluntary consent to proposed actions. The waiver of fiduciary duties... read more
A plaintiff seeking to bring a derivative claim on behalf of a corporation, limited liability company or limited partnership must be “suitable” and represent the interests of the business. A member of a limited liability company may sue individually to recover or protect the member’s individual right. New Jersey... read more
The removal of a member from a limited liability company, known as involuntary dissociation, is permitted by statute in most states and may also be permitted in an operating agreement. Removal is permitted when a member has engaged in wrongful conduct that has or will materially affect the company... read more
A business divorce is the process by which the owners of a business separate their business interests. The process involves negotiation and may also require litigation. These cases can be divided into four phases: the emergent phase, the examination phase, the valuation phase and the resolution phase. Most owner... read more
The effective date of an LLC member’s expulsion may be a critical issue in business divorce litigation and may be tied to critical events or the litigation. Courts will look at the facts and circumstances of the case before determining the effective date, but are often guided by the... read more
A limited liability company member withdraws by voluntary dissociation, which occurs when the company has notice of his ‘express will” to withdraw. Voluntary dissociation terminates management rights, but not economic rights. A court may refuse relief on a claim when the plaintiff has acted with unclean hands with regard... read more
The law that controls any business organizations is a creature of state law, and disputes among owners in a business divorce involve the application of the law where the business was formed. More often than not that means the law of the state in which the dispute is being... read more
Litigating with a former employee for violation of a restrictive covenant agreement becomes more complicated when the former employee was terminated without good cause. And because we are an at-will employment economy, this becomes an issue more frequently than one might imagine. As one author notes, it typically is... read more
An Illinois appellate court affirmed a finding of breach of fiduciary duty and the expulsion of a limited liability company member under a version of the Uniform Limited Liability Company Act. The case is of interest for the way it construes the model partnership and limited liability company acts.... read more
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