The “Business Judgment Rule” Applies in LLCs Too
Corporate directors have long relied on the “business judgment rule,” under which their decisions are presumed to have been made “on an informed basis, in good…
LLC Members May Ratify Prior Defective Actions
Actions taken within business entities are sometimes deemed invalid due to procedural defects. For corporations, section 119 of the Corporations Code establishes a clear procedure by…
To Moot a Statutory Buyout, LLC’s Dissolution Must be Valid Under its Operating Agreement
In 2022, The LLC Jungle covered the opinion Friend of Camden, Inc. v. Brandt in a post titled LLC Dissolution Vote Defeats Statutory Buyout. In the…
The Perils of Buying Property from an LLC with Competing Claims to Managerial Authority
Prior LLC Jungle posts have addressed the tricky issue of LLC managerial authority in the context of the LLC’s dealings with third parties. See: LLC and…
Operating Agreement Doesn’t Excuse Breach of Fiduciary Duty
Many posts on The LLC Jungle blog have focused on the fiduciary duties owed by LLC managers to both the LLC’s members and the LLC itself.…
Another Case Addressing Managerial Discretion and the Implied Covenant of Good Faith and Fair Dealing
LLC managers often enjoy wide latitude and unrestricted “discretion” under the LLC’s operating agreement. At the same time, all contracts — including LLC operating agreements —…
Receiver for LLC Can be Bound by Operating Agreement’s Arbitration Provisions
Courts often appoint receivers to manage the affairs of LLCs when the internal management is conflicted or broken. General equity receivers (as opposed to more limited…
Can an LLC Member be Forced to Contribute to the LLC’s Debts?
Members of an LLC are required to pitch in equally for the LLC’s expenses and debts, right? Generally, no. In a recent unpublished opinion filed by…
LLC Operating Agreements: Indemnity, Arbitration, and Equity
LLC operating agreements frequently provide for indemnity to the LLC’s manager. This is consistent with the statutory default rule embodied by California Corporations Code section 17704.08(a),…
LLC Dissolution Vote Defeats Statutory Buyout
Several prior LLC Jungle posts have explored the statutory buyout procedures established by California Corporations Code section 17703.03 and related statutes: a botched buyout “fair value”…