The Bankruptcy Court for the Southern District of Texas recently confronted an apparent conflict between applicable Delaware law and the Bankruptcy Code, determining that the Bankruptcy Code overrides state law and protects the debtor from expulsion by its fellow LLC members.  In re Envision Healthcare Corp., No. 23-90342, 2023 WL 8607444, at *1 (Bankr. S.D. Tex. Dec. 12, 2023).

AmSurg Holdings LLC, a debtor, was one of three members in a Delaware LLC.  Ostensibly in reliance on a seemingly “automatic” expulsion provision in Delaware law, the non-debtor members of that LLC amended the organizational documents governing the LLC after AmSurg, together with its Envision Healthcare affiliates, commenced a bankruptcy proceeding.

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