Friday, November 13, 2015
Just a quick report from the 2015 ABA LLC Institute, an annual event held in the fall in Washington, DC that attracts anally compulsive (and I do mean that in the most positive way possible) business lawyers (academics and practitioners) interested in limited liability companies (LLCs) and other alternative business entities. The agenda for this year's program is full of nifty stuff and great presenters (present company excepted). Co-blogger Josh Fershee would love the LLC Institute. No one here confuses the LLC with the corporation! (I will just link to one of Josh's fabulous posts on that topic as a reference point.)
For this year's institute, I chaired a panel on dissolution in the LLC and also participated in a panel that explored just what an LLC operating agreement really is. I was wowed in each case by my co-paneleists. Because the norm at this conference is to interrupt the panelists and comment on their presentations as they speak, the discourse was engaged and lively.
I will save my comments on the operating agreement panel for next week's micro-symposium. Today, I want to briefly cover highlights from the dissolution panel. Specifically, we focused a lot of attention on the evolution of dissolution events under the uniform and prototype LLC acts and various state LLC statutes since the adoption of the federal income tax "check the box" rules. There's more in and related to that topic than you might think . . . .
I introduced the panel with observations from a book chapter I recently wrote on fundamental (basic) change transactions in the LLC. I began by assessing the current state of LLC dissolution law based on my work on that chapter. The statutory provisions and cases in this area of the law are a varied lot as across the LLC law I surveyed. Then, I outlined in context the three themes that I highlight in the chapter: the influence of freedom of contract and corporate law, the decreasing influence of the vested rights doctrine, and the continued salience of legislative innovation and careful legal drafting.
Doug Moll followed. I could listen to Doug all day. He presented outtakes from a 50-state survey that he had done on member-iniitiated judicial dissolution provisions in LLC acts. This part of the panel picked up on some of the observations I had made in the introduction about specific types of dissolution proceeding. Doug identified for us the judicial dissolution events that have become commonplace in these statutes. He also drilled down into more detail in a few areas of interest. For example, Doug was able to identify differences in language choice as among the states for deadlock dissolution provisions: e.g., the judicial dissolution event based on the reasonable impracticability of conducting the company’s business [in conformity with the operating agreement and/or the articles of organization]. The bracketed language is not included in one state's provision, and when included in LLC judicial dissolution statutes, it varies as across states--including as to the conjunction and whether the provision mentions conformity with the articles or merely the operating agreement. Among the wonderful ensuing discussion topics: whether the concept of an operating agreement (which may, under state law, comprise more than one document) includes or could include the articles of organization.
Carter Bishop then addressed dissolution issues at the intersection of LLC law and bankruptcy law. Among the hot topics? The history and current state of statutory dissolution events based on the bankruptcy of a single member and the status of an LLC operating agreement as a possible executory contract in bankruptcy in light of In re Denman and other similar opinions. This segment of the panel presentation provided a nice segue into issues covered in the succeeding panel's discussion on operating agreements, in which I also played a role. Super information, well delivered. Carter's views on LLC law are among those I actively seek out.
I was so delighted to be able to secure Doug and Carter for this panel. Sometimes, in organizing a session like this, one is just plain lucky to get the right folks. This was one of those times. I, along with others, was enlightened.
I close with a quick footnote on the title of this post. I mentioned to a fellow attendee at the luncheon during the institute yesterday what I had posted as a status on Facebook on Wednesday on my way to DC for the conference: "Joining my LLC nerd-friends at the ABA LLC Institute, which starts in the AM. We'll be missing Mark Loewenstein, who has more exciting things to do." The fellow attendee, true to form for folks who come to the LLC Institute, noted that "wonk" would be a more appropriate word choice than "nerd." I had to concede he was right. Click on the links and see if you agree--and understand why he made that point . . . .