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Limited Liability Company (LLC) Bankruptcy Court

Whiteford

Client Alert: Bankruptcy Meets State Court: Lessons from a $4M Escrow Dispute - June 30, 2025

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When bankruptcy courts and state courts vie for authority in complex financial disputes, the outcome can reshape recoveries for creditors, investors, and businesses. This tension was front and center in Silverman v....more

Farrell Fritz, P.C.

The Humble LLC Exculpation Clause Wins Big: Member/CEO Escapes $8M Fiduciary Claims

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It’s difficult to assess the potency of section 417(a) of New York’s LLC law.  The provision starts off with a seemingly broad rule: “The operating agreement may set forth a provision eliminating or limiting the personal...more

Cadwalader, Wickersham & Taft LLP

The Impact of In re 301 W N. Ave., LLC on the Enforcement of Bankruptcy-Remote Protections

Executive Summary - The recent decision In re 301 W N. Ave., LLC, 666 B.R. 583 (Bankr. N.D. Ill. 2025) represents a significant development at the intersection of corporate governance, commercial real estate, and...more

Patterson Belknap Webb & Tyler LLP

Court Orders Removal of Couple from Upper East Side Mansion

While the bankruptcy world’s eyes are locked on the genetic code up for auction in 23andMe’s chapter 11 proceedings, we are also focused on a more old fashioned asset: New York City real estate. 19 East 75th Street (the...more

Farrell Fritz, P.C.

LLC Member States Direct Claims Arising from Machiavellian Manager’s Tactical Bankruptcy Petition

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“There is only going to be one winner here, and it’s not going to be you—give in while there is something still left in it for you,” said one LLC member to the other. With co-owners like that, who needs enemies?...more

Proskauer Rose LLP

Enforceability of Golden Directors with Bankruptcy Consent Right

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The appointment of an independent director is a powerful tool for private credit lenders. The appointment is designed to introduce a voice of neutrality and fairness into the board’s decision-making process with the hope and...more

Kilpatrick

When Provisions in a Loan and LLC Agreements Do Not Impermissibly Restrict a Bankruptcy Filing

Kilpatrick on

In In re 301 W North Avenue, LLC, 2025 WL 37897 (Bankr. N.D. Ill. 2025), a bankruptcy court recently addressed provisions in a loan agreement and limited liability company (“LLC”) operating agreement as to their effect on...more

DLA Piper

US Bankruptcy Court Grants Motion to Dismiss LLC Chapter 11 Case for Failure to Obtain Requisite Corporate Filing Authority

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The US Bankruptcy Court for the Northern District of Illinois (Bankruptcy Court) recently issued an opinion in In re 301 W North Avenue, LLC, Case No. 24 B 2741 (DDC) [Docket No. 253] (January 6, 2025) granting a secured...more

Morris James LLP

Delaware LLCs, Independent Managers, and Bankruptcy Remote Structures: Lessons from 301 W North Avenue

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Overview Limited liability companies (LLCs)—curious creatures of state law—often file bankruptcy. Bankruptcy courts have, therefore, developed a dynamic body of law to evaluate the “bankruptcy remoteness” of LLCs, assessing...more

Eversheds Sutherland (US) LLP

Recent Bankruptcy Decision Reminds of the Importance of Corporate Governance Documents

On January 6, 2025, the United States Bankruptcy Court for the Northern District of Illinois (the Bankruptcy Court) granted a mortgage lender’s motion to dismiss a debtor’s bankruptcy filing due to the debtor’s lack of...more

Pillsbury Winthrop Shaw Pittman LLP

U.S. Bankruptcy Court Holds that State-Court Receivership Order Does Not Bar Managing Member from Seeking LLC Bankruptcy Relief

A typical receivership order does not limit the ability of a managing member to seek limited liability company bankruptcy relief for distressed real estate or other enterprises. An enterprise, even if in receivership,...more

Proskauer Rose LLP

Private Credit Restructuring — Are You an “Insider” and Why Does it Matter?

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Navigating a successful restructuring requires skill and experience to look around corners, anticipate issues, and take proactive steps to minimize risk and uncertainty.  In this alert we highlight one of those risks —...more

Farrell Fritz, P.C.

Summer Shorts: An Unusual Application of LLC Law § 608 and Other Decisions of Interest

Farrell Fritz, P.C. on

Welcome to this 14th annual edition of Summer Shorts. This year’s edition features brief commentary on three recent decisions by New York courts in business divorce cases. The featured cases involve a suit pitting three...more

Jones Day

Ability of Creditors' Committees to Prosecute Estate Claims Given a Boost in Delaware Bankruptcy Courts

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The practice of conferring "derivative standing" on official creditors' committees or individual creditors to assert claims on behalf of a bankruptcy estate in cases where the debtor or a bankruptcy trustee is unwilling or...more

Proskauer Rose LLP

Conflict Between Delaware LLC Act and Bankruptcy Code Affects Creditor Toolbox

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As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of...more

Holland & Knight LLP

Delaware Bankruptcy Court Grants Creditors' Committee of Debtor LLC Derivative Standing

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In a recent opinion, In re Pack Liquidating, LLC (Pack Liquidating), the U.S. Bankruptcy Court for the District of Delaware held that under Official Committee of Unsecured Creditors of Cybergenics Corp. v. Chinery...more

Mintz - Bankruptcy & Restructuring Viewpoints

Delaware Bankruptcy Court Grants Derivative Standing to Creditors’ Committee to Sue Members and Officers of Delaware LLC

In early February, a Delaware bankruptcy judge set new precedent by granting a creditors’ committee derivative standing to pursue breach of fiduciary duty claims against a Delaware LLC’s members and officers. At least three...more

Jones Day

Texas Bankruptcy Court: Debtor's Non-Economic Rights Under LLC Agreement Are Estate Property Protected by Automatic Stay

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The Bankruptcy Code invalidates "ipso facto" clauses in executory contracts or unexpired leases that purport to modify or terminate the contract or lease (or the debtor's rights or obligations under the contract or lease)...more

King & Spalding

Sharp Teeth: Civil and Criminal Liability for Officers and Directors of Insolvent Saudi and UAE Companies

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The recent detention of a restructuring professional in the United Arab Emirates serves as a stark reminder that directors and officers of insolvent or distressed companies can face personal liability for their actions or...more

Patton Sullivan Brodehl LLP

Does an LLC’s Bankruptcy Discharge Apply to the LLC’s Alter Egos?

When a debtor LLC receives a discharge order from a bankruptcy court, a creditor is prevented from enforcing any preexisting debts against the discharged LLC as a personal liability.  This is known as the “discharge...more

Holland & Hart LLP

Georgia-Pacific Ruling Furthers Texas Two-Step Challenges

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The U.S. Court of Appeals for the Fourth Circuit recently approved injunctive relief as part of a strategy for settling mass tort claims through the Chapter 11 bankruptcy case of Bestwall LLC, an entity created by...more

Herbert Smith Freehills Kramer

And Another Lender Blocking Provision Bites the Dust, Texas Bankruptcy Court Rules

One feature commonly seen in commercial lending transactions is a waiver of the borrower’s authority to file for bankruptcy without the consent of the lender. While such “blocking” provisions are generally upheld where the...more

Nelson Mullins Riley & Scarborough LLP

Tenth Circuit BAP Holds that Section 541 of the Bankruptcy Code Doesn’t Invalidate Transfer Restrictions in LLC Operating...

In a recent decision by the Tenth Circuit Bankruptcy Appellate Panel, the court held that a chapter 7 trustee could not sell an LLC membership interest pursuant to section 363 of the Bankruptcy Code because of a transfer...more

Proskauer Rose LLP

Del. Bankruptcy Rulings Instruct on Creditors' Rights to Sue

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Creditors of distressed businesses are often frustrated by shareholder- controlled boards when directors pursue strategies that appear to be designed to benefit shareholders at the creditors' expense. In these...more

Proskauer Rose LLP

Suing Directors of a Troubled Business: When Form Trumps Substance

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Creditors of distressed businesses are often frustrated by shareholder-controlled boards when directors pursue strategies that appear to be designed to benefit shareholders at the creditors’ expense. In these circumstances,...more

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