August 9, 2022

Volume XII, Number 221

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August 08, 2022

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Vote To Dissolve LLC Defeats Buy-Out Option

The California Revised Uniform Limited Liability Company Act provides procedures for both voluntary and judicial dissolution.  When a member or members of a California limited liability company files an action for its judicial dissolution, the other members may avoid the dissolution by buying the moving members out for cash.  Cal. Corp. Code § 17707.03(c).   What happens to this buy-out right if the members subsequently elect to dissolve voluntarily?

In Friend of Camden, Inc. v. Brandt, 2022 WL 3037454, the plaintiff, a holder of a 1% interest in an LLC, filed an action seeking judicial dissolution pursuant to Section 17707.03.  other members of the LLC responded to this action by filing a motion to avoid dissolution by purchasing the plaintiff's 1% interest in the LLC.  Not wanting to be bought out, the plaintiff, joined with the holders of 49% of the LLC's interests, voted to dissolve the LLC voluntarily.  The Court of Appeal concluded:

Section 17707.01 expressly permits a vote to dissolve, and such a vote effectively moots a judicial dissolution proceeding and any ensuing buyout proceeding.

Accordingly, the trial court was required to dismiss the buy-out proceeding and direct the parties to proceed with the winding up of the LLC.  

 The SEC's Bounty Program Finally Attracts Scrutiny

Nearly six years ago, I began questioning the SEC's whistleblower bounty program.  At long last, others are taking note.  For example, Professor Alexander I. Platt at the University of Kansas School of Law last week wrote that using data obtained pursuant to the Freedom of Information Act he has found that the SEC's tip-triage system has been  "outsourced to a group of well-connected, repeat-player, private whistleblower lawyers who are exempt from any meaningful transparency, regulation, or public accountability".

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 217
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

949-851-5428
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