News & Analysis as of

Limited Liability Company (LLC) Fiduciary Duty Bankruptcy Court

Whiteford

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

Whiteford on

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

Farrell Fritz, P.C. on

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

Farrell Fritz, P.C.

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

Farrell Fritz, P.C. on

“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

Proskauer Rose LLP on

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

DLA Piper on

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

Morris James LLP on

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

Proskauer Rose LLP

Conflict Between Delaware LLC Act and Bankruptcy Code Affects Creditor Toolbox

Proskauer Rose LLP on

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

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

Proskauer Rose LLP

Del. Bankruptcy Rulings Instruct on Creditors' Rights to Sue

Proskauer Rose LLP on

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

Proskauer Rose LLP on

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

Patton Sullivan Brodehl LLP

LLC Operating Agreements Can Reduce Fiduciary Duties

LLC managers owe fiduciary duties both to the LLC and to the LLC’s members, similar to the duties owed by a partner to other partners in a partnership.  (Corp Code §17704.09.)  These include the duty of loyalty, care, and...more

Winstead PC

Bankruptcy Court Discussed The Fiduciary Duties Owed To A Limited Liability Company And Its Creditors By Its Manager

Winstead PC on

In In re Silver State Holdings, in a bankruptcy proceeding a trustee of a limited liability company sued its former manager for breach of fiduciary duty and another entity for conspiracy to breach fiduciary duty arising out...more

BCLP

Bankruptcy Courts Closing In – Will An Agreement Requiring Unanimous Consent To File For Bankruptcy Be Effective?

BCLP on

We’ve all seen it. The business opportunity looks enticing but is laced with risk about a potential bankruptcy filing down the road. As bankruptcy lawyers we are often asked how deals can be structured to prevent a...more

16 Results
 / 
View per page
Page: of 1

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
- hide
- hide