The attached new blog post from Peter Mahler of the FarrellFritz law firm provides a clear and practical discussion concerning removals of LLC members and of the issue of fair market value vs. fair value.
The new post from the FarrelFritz law firm address excellently a key issue in buy-sell provisions in multi-member LLC operating agreements—namely, the issue of the discount for lack of marketability (“DLOM”). Here’s the link:
The post in the link below in Peter Mahler’s excellent “New York Business Divorce” blog address a subject on which every LLC lawyer must have expert knowledge.
Who Decides Disputed Valuation Under LLC Agreement’s Buy-Out Provision: Arbitrator or Appraiser?
The article cited below will be of interest to many LLC lawyers, members and others. I’ve also set forth below the first paragraph of the article.
22 Transactions: Tenn. J. Bus. L. 170
Transactions: The Tennessee Journal of Business Law
Fall, 2020
Case Commentary
Issam Bahour
Copyright © 2020 by Transactions: The Tennessee Journal of Business Law, Inc.; Issam Bahour
LLCS–VALUATION OF MEMBERSHIP INTEREST IN LIMITED LIABILITY COMPANIES
The Tennessee Court of Appeals held that, in the context of Tenn. Code Ann. § 48-249-505-506, (1) “fair value” is determined by the member’s proportionate interest in the company as a going concern, and is distinguished from “fair market value”, which consists of the price at which property would change hands between a willing buyer and a willing seller; (2) discounts for lack of control and marketability are not necessary for appraising a membership interest; and (3) tax affecting is relevant in assisting the court’s determination of the fair value of the going concern value of an S corporation. Raley v. Brinkman, No. M2018-02022-COA-R3-CV, 2020 Tenn. App. LEXIS 341 (Tenn. Ct. App. July 30, 2020).
Under the link below is a post in Peter Mahler’s Business Divorce column about an issue that all LLC lawyers should be aware of. The author summarizes the subject of the column as follows:
Can an LLC member with a put option–the right to sell his interest back to the LLC–exercise that option when doing so will render the LLC insolvent? This week’s New York Business Divorce post highlights a recent decision by Justice Masley of the New York County Commercial Division considering this issue.
Here’s the link:
Whenever you draft a buy-sell provision in an LLC operating agreement, you want to consider whether it’s also, effectively, a call provision. The new post from Peter Mahler’s blawg under the link below addresses a recent Delaware Court of Chancery case on this issue.
Here’s the link: https://www.nybusinessdivorce.com/2020/06/articles/buyout/consider-whether-your-buy-sell-provision-is-a-call-option-before-pulling-the-trigger/
The very recent Delaware Court of Chancery case discussed under the link below is yet additional evidence that if you want any specific buy-out right or other right in an operating agreement to be revocable, the operating agreement must explicitly so provide.
https://www.lexology.com/library/detail.aspx?g=51b78f76-8db1-4696-b7b2-610b817b3a02&l=8UX9J5Q
The link below is to the latest post by Peter Mahler, in which he addresses a recent New York state case in which a bought-out LLC member tried but failed to receive distributions over and above the buy-out price. The case suggests (to me, at least) that it may sometimes be useful to address this issue in operating agreements.
Under the link below is a scary recent PLLC ruling by a NY court, as discussed by Peter Mahler of the FarrellFritz law firm in his latest post. Peter summarizes his post as follows:
This week’s New York Business Divorce examines a noteworthy decision by Justice Richard Platkin involving the break-up of a law firm organized as a professional services limited liability company, in which the court addressed the potential liability of two members to buy out a third member’s interest after they withdrew from the firm.
Here is the link:
Peter Mahler’s latest post—as usual, an excellent one—addresses a very recent New York appellate decision concerning a potential buy-out of a deceased member of a real estate holding company LLC—11 years after the member’s death! The facts are weird but the case nevertheless holds many lessons for LLC lawyers drafting buy-sell provisions for deceased LLC members.
Here’s the link: