Wednesday, February 12, 2014

How Not to Impress City Council with Your LLC

This article popped up from the local paper (home of internet sensation Marilyn Hagerty) serving the area of my prior instituion

Committee recommends no liquor license for Rumors bar in Grand Forks

The Grand Forks City Council Service/Safety Committee recommended Tuesday that the city deny a liquor license transfer for Rumors bar in Grand Forks.

The committee originally recommended the full council deny the license earlier this month because of the previous felony charges against Blake Bond, Jamestown, N.D., one of the partners in Sin City LLC, the applicant of the license.

The council then sent the issue back to the committee, but when representatives from Sin City failed to show up at Tuesday’s meeting, the committee voted to recommend denying the license again. . . . .

A quick note for the reporter, who wouldn't necessarily know this:  LLCs don't have partners. They have members.  So, the more accurate statement would be that Mr. Bond "is one of the members of Sin City, LLC."  The North Dakota Limited Liability Company Act definitions provision explains that:

"Member" means a person, with or without voting rights, reflected in the required
records of a limited liability company as the owner of a membership interest in the
limited liability company.

 N.D. Cent. Code 10-32-02 (40)

As for the LLC members, here's a hint: it's probably best not to name your LLC "Sin City, LLC" when you want approval from the council's Safety Committee and need approval of the full council to get the liquor license you need for your bar.  This is likely to be even less of a good idea when one of your LLC members apparently has prior felony convictions.  It's also probably best to show up for the council meeting to make your case, too, if the council is willing to listen. 

In this circumstance, it is entirely possible that Sin City, LLC, was formed (about a month ago) without the services of an attorney. I rather hope so.  Although as lawyers we are not necessarily required to opine on entity names or other business decisions, sometimes being a good counselor requires suggesting to one's client the potential implications of such decisions.  Here, for example, good counsel might have suggested that other naming options might be preferable.

Clients won't always listen, of course, but it's worth a shot (no pun intended).

Business Associations, Joshua P. Fershee, LLCs | Permalink

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