Card Set Information
Who do managers owe a fiduciary duty to?
What kind of duties do members in a member managed LLC owe?
Duty to all other members
member's fiduciary obligations in a manager managed LLC?
they don't have any- just good faith.
Recent member fiduciary case in LLC
re South Canaan Cellular Investments, LLC (Bankr. E.D. Pa.
2010)(applying Delaware law)(D LLC member allegedly misused the LLC’s
confidential information to which the member had been granted access to buy a
debt owed by the LLC to a third party)
: No breach of
fiduciary duty! This non-managing, non-controlling member had no fiduciary duty
No breach of implied
covenant of good faith & fair dealing bcz Del statute lets a member lend $ and transact business
with the LLC, and the LLC gave the member access to the info
If you have unbounded discretion?
you usually have full fiduciary obligation
Dissociation as it applies to Fiduciaries:
distributional intersest must be bought if at will
if for term:
Article 7 applies if terminated before term
Article 8 applies if after
Fiduciary and managment rights end at dissociation
Dissociation does not entitle member to distribution
Managment rights ends
If manager, fiduciary duties end as to post dissociation matters
Member ownes interest as transferee
Deleware has no concept of dissociation
expulsion as it relates to LLC's
Pursuant to OA
Or by unanimous vote if
1) unlawful for member to carry on
2) there has been a transfer of a members distributional interests
3) corporation of partnership membership ceases
judicial expulsion in LLC
a) acts wrongfully, materially and adversly affects business
b) willfully and persistently breached OA or fiduciary or statutory obligations
c) conduct makes it not reasonably practicable to carry on
Events causing dissolution in LLC
1)Express will to withdraw
2)Agreed event in OA
3)Transfer of distributional interest
4) expulsion under OA or Vote, or judical
What leads to dissociation under RUPA and UPA?
UPA- Dissociation always leads to Dissolution
1) Disssociation by express will in an at will partnership
2) In an term partnership
: 90 days within death or dissociation, majoirty of partners vote to dissolve, express will of all partners, end of term
3) Event outlined in OA
4) Illegal to continue
5) Judical determination
6) Transfer of partner's transferable interst
What is the standard for limited liability in LLCs?
No personally liable for LLC's debts solely by reason of acting as a member or manager
for U this can be changed by articles and in writing
for D the member can otherwise agree aroudn it.
How is delaware different regarding th right to forclose on a charging order?
Deleware doesn't include anything regarding forclosure- the other two say its fine.
What is one way that ULLCA is unique in regards to the enforcement of chargin orders
ULLCA allows for dissolution on account of a charging order if at will or at end of term llc
R doesnt mention judicial dissolution
D it is presumable not available
How are LLC's default allocation of profits and losses?
U and R
: equal shares
: as to members contributions
in llc, is a member's obligation to make contributions exused by death?
no, same for all three
When is a member of an LLC liable for wrongful distributions under U and R? how is that different from D?
Under U and R , member is liable of llc insolvent in equity or bankrupcy sense
D: liable if liabilities greater than fair maket value of assets