New York Court Applies Business Judgment Rule to Protect Decisions of Member Appointed Liquidator

New York Court Applies Business Judgment Rule
to Protect Decisions of Member Appointed Liquidator

      In a recent posting on the New York Business Divorce blog, Peter Mahler has reviewed what appears to be the first decision from the New York Court interpreting section 703 of New York’s LLC Act, it addressing receivers and liquidating trustees for LLCs. The case in question is Matter of FGLS Equity LLC, 2020 WL 2557877, 2020 NY Slip Op 31476(U) (Sup. Ct. NY County May 20, 2020). Peter’s review is set forth in a posting titled Business Judgment Rule Prevails and Fight Over Liquidation Plan for Dissolved Madoff Feeder Fund.  HERE IS A LINK to that post.

      In light of Peter’s excellent review, I will simply refer you to his discussion. I would add to his “Take Away” only the suggestion that, in drafting orders with respect to the appointment of receivers and liquidating trustees, it may be prudent to address the standard by which their decisions will be made and whether a particular portion or percentage of the members of the LLC may, in effect, endorse and confirm a particular plan of action or, in the alternative, require a reassessment.