Friday, November 8, 2019
Day 1 of the 2019 LLC Institute
Day 1 of the 2019 LLC Institute
Day 1 of the 2019 LLC Institute started with the usual announcements and a thank you to Holland & Knight / Lou Conti for the reception they presented for us last evening. It was a great start to the LLC Institute.
The substance of the Institute began Thursday morning with the always popular case law review chaired by Professor Beth Miller. Joined as she has been in recent years by Dan Sheridan, Kelley Bender and Sean Ducharme, they collectively reviewed a variety of cases from across the country.
Sean, in his review of a variety of piercing the veil cases, noted that an open question is whether the burden of proof should be preponderance or clear and convincing. Dan reviewed cases addressing rights of indemnification and the admission of new members. Kelley reviewed a number of dissolution decisions, noting how courts sometimes struggle with the application of statutes governing dissolution and the gaps therein. Other of the decisions she reviewed addressed standards for judicial dissolution and specifically the LLC’s purpose. Beth began by reviewing a Connecticut decision wherein the state Supreme Court recognized that while the legislature barred reverse piercing, it still existed for claims pre-existing the effective date of that statute.
Kelley Bender put in a most justified plug for Peter Mahler’s blog New York Business Divorce.
The next panel, it focusing upon Delaware and bankruptcy case law developments, featured Lou Hering, Tammy Mercer and Jim Wheaton. Jim began with the bankruptcy decisions, including the lack of standing of a bankrupt sole member when the trustee sold the LLC’s assets, operating agreements as executory agreements, and bankruptcy remoteness. Tammy’s presentation began with a limited partnership / Caremark case. She reviewed the concept of “contractual fiduciary duties” and with comments from the audience addressed related standing and remedies implications. Tammy and Lou continued with the review of several other Delaware decisions addressing points including whether a member subject to a non-compete may compete thru a wholly-owned affiliate (short answer = “no”) and the implications of a “void” act.
We then adjourned to our lunch whereat Dean Don Weidner presented a high energy keynote address on the developments in liquidity rights in unincorporated entities and the shift from withdrawal = liquidity to a rule of capital lock-in and restricting participants to derivative rather than direct actions for breach of the controlling agreement.
After lunch we convened for a panel led by Professor Brad Borden, he joined by Michael Soejoto, addressing Contribution Default Remedies in Operating Agreements. They reviewed whether interest dilution is effective in a failing venture to compel performance (often it is not) and what might be on relevant facts effective remedies. The presentation was highly technical, but the topic is highly technical; you need to do the math.
The afternoon’s presentations ended with a program chaired by Peter Mahler was titled LLC Agreements That Went Wrong and How to Fix Them: Case Studies and War Stories. Joined by Ladd Hirsch, Professor Meredith Miller and Lou Conti, they addressed a variety of situations and cases in which the operating agreement was from one perspective just fine and from the other perspective horribly unfair. The purpose clause and dissolution was highlighted by Peter, while Ladd focused upon transfer of an interest provisions. Professor Miller addressed dispute resolution provisions in operating agreements. Lou Conti batted clean-up by focusing upon management and fiduciary duties.
Thursday evening continued with a cocktail hour and then the Lubaroff Award Dinner. Before turning to that award the Committee’s Content Award, sometimes known as the Beth Miller Award That We Cannot Name After Beth As She Is Still With Us, was presented to Gerald Niesar in recognition of his many years of contributions to partnership and LLC Law, including as the primary drafter of the White Paper that initiated what became RUPA. Beth Miller made the presentation to a surprised Gerry.
The dinner then turned to the Lubaroff Award and honoring Professor Dan Kleinberger. With Lauris Rall serving as master of ceremonies, the comments began with those of Carter Bishop, Dan’s long-time co-author and co-conspirator in all things involving LLCs and their work as reporters (jointly and individually) got various uniform law projects. Without intending to name everyone, Jim Wheaton, Scott Ludwig, Beth Miller, Steve Frost and Lisa Jacobs all spoke. Lou Hering, in addition to lauding Dan, gave our traditional remembrance of and toast to the memory of those no longer with us. After the comments Dan took the stage. After explaining why he was not wearing his trademark black shirt (even though many of us in attendance had dressed in black), Dan addressed his wonderful family, his work with Carter and his work with our Committee. And he spoke of his remembrances of Marty Lubaroff. Our proceedings concluded with the presentation of the award by Christina Houston.
So ended the first day of the 2019 LLC Institute.