In one of the first challenges to the recent amendments to Delaware’s LLC Act, the state’s Court of Chancery has ruled that parties forming a limited liability company can contract out of the right to judicial dissolution. The court issued the opinion when it rejected a plaintiff’s motion to seek judicial dissolution, a default right under the LLC Act, because the entity’s formation agreement specifically eschewed that right.
“So long as the LLC has assets and remains in operation, those sections provide for dissolution only where a supermajority of members so approve,” said Vice Chancellor Sam Glasscock III in Huatuco v. Satellite Healthcare. “The parties did not agree to judicial dissolution, and … instead rejected all default rights under the LLC Act unless explicitly provided for in the LLC agreement or ‘otherwise required’ by law.”
