Thursday, August 29, 2019
Who is a Member?
In his blog New York Business Divorce, Peter Mahler has reviewed a recent New York decision (in which he served as counsel for the prevailing parties), Matter of Shiel (Cool Frames, LLC) (not on Westlaw).
In this instance, an individual with whom discussions had once taken place as to him becoming a member in the company brought an action for judicial dissolution when the company sued him for embezzling its’ funds. As the capacity for bringing an action for judicial dissolution is premised upon status of a member, whether he was or was not a member was the initial consideration.
Holding he was not a member, the court looked to a number of factors including that there was no signed written operating agreement identifying him as a member, he had engaged in conduct inconsistent with being a member, and had never been identified as a member on the tax or accounting records of the company.
The title of that blog posting is Court Looks to Partnership Law in Ruling Against Petitioner’s Status as LLC Member; HERE IS A LINK to that posting.