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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Tuesday, December 17, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will provide corporate counsel with a framework for adopting deadlock-breaking mechanisms in limited liability company (LLC) operating agreements and potential state law consequences when no such arrangements are in place. The panel will also discuss arbitration and mediation provisions as alternatives to litigation or judicial dissolution.

Faculty

Louis T.M. Conti
Partner
Holland & Knight LLP

Mr. Conti's practice includes serving as outside counsel to businesses of all sizes, mergers and acquisitions, cash flow and asset-based financings, leveraged buy-outs, mezzanine and subordinated debt transactions, public and private equity placements, venture capital and private equity investments, company governance advice, sophisticated and complex cross-border transactions, and joint ventures and strategic alliances. He has served as a special master and arbitrator in LLC disputes, and as an expert witness in connection with Florida corporate and LLC law in cases around the state. He is the co-author of "Deadlock-Breaking Mechanisms in LLCs—Flipping a Coin Is Not Good Enough, but Is Better Than Dissolution" published in Business Law Today.

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Peter A. Mahler
Partner
Farrell Fritz, P.C.

Mr. Mahler’s litigation practice concentrates on corporate dissolution proceedings, contested stock valuations, derivative actions and other disputes among co-owners of closely held business entities, including limited liability companies, partnerships and business corporations. He is a recognized authority and frequent lecturer on “business divorce,” about which he has written hundreds of articles on his widely followed blog, New York Business Divorce. He provides pre-litigation counseling to business owners involved in emerging disputes with business partners and, when litigation results, he represents clients through all phases of trial, appellate, mediation and arbitration proceedings. 

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Description

Deadlocks in an LLC typically arise when members or managers fail to reach an agreement or obtain the required approval for a course of action. The failure to provide deadlock-breaking mechanisms in the operating agreement can result in significant expense, loss of time, and possible litigation. It may also result in a judicial dissolution of the LLC.

Counsel can employ various provisions in LLC agreements to break a deadlock, including buy-sell conditions, external or internal "tie-breakers," put or call options, and, where appropriate, provisions for partition or sale of the company or its assets. These provisions may be critical for the continued operation of the business.

Absent such provisions, LLC statutes will typically provide for judicial remedies such as placing operational control in a custodian or dissolution of the entity. Operating agreements that do not offer mechanisms to break a deadlock may provide alternate methods of resolving disputes, such as mediation and arbitration. Counsel should understand the pros and cons of these alternatives for the LLC's members.

Listen as our authoritative panel outlines and provides drafting tips for various deadlock-breaking mechanisms in operating agreements. Counsel will also discuss arbitration vs. mediation and why either option is likely preferable to litigation or judicial dissolution of the entity.

Outline

  1. When deadlocks arise in LLC decisionmaking
  2. Provisions designed to resolve deadlocks
    • Buy-sell
    • External or internal "tie-breakers"
    • Put or call options
    • Partition or sale of the company or its assets (and when that is appropriate)
  3. Provisions requiring alternative dispute resolution
    • Mediation
    • Arbitration
  4. The goal: avoiding litigation or judicial dissolution

Benefits

The panel will review these and other high priority issues:

  • What are the typical triggers of a deadlock between members or managers?
  • What are the key provisions that should be included in the LLC's operating agreement to resolve the deadlock?
  • When is a partition or sale appropriate to resolve a deadlock?
  • What are the advantages and disadvantages of arbitration and mediation, and what should the LLC provide?