A recent Delaware Court of Chancery ruling cited Symonds & O’Toole on Delaware Limited Liability Companies in its decision.
In Capone v. LDH Management Holdings LLC, 2018 Del. Ch. LEXIS 131, Vice Chancellor Sam Glasscock found that “because the Defendants were aware at the time of dissolution of the Plaintiffs’ non-frivolous claims against the LLCs for breach of contract, the LLC Act required creation of a reserve to cover the Plaintiffs’ claims. It is undisputed that the Defendants failed to do that. Accordingly, the LLCs were dissolved in violation of Section 18-804(b)(1), and the certificates of cancellation shall be nullified.”
In his ruling, Vice Chancellor Glasscock cited a passage from Symonds and O’Toole: “One leading treatise provides an illustrative discussion of the LLC Act’s treatment of known claims:
One example of a contingent, conditional contractual claim is a right to indemnification under the limited liability company agreement; under many such indemnification provisions, the claim arises only if a covered loss occurs and becomes an entitlement only if the would-be indemnitee has satisfied an applicable standard of conduct. A contingent or conditional claim against the limited liability company must be accounted for under Section 18-804([b])(1) irrespective of the likelihood that it will actually 'vest.'"
About Symonds & O’Toole on Delaware Limited Liability Companies
Published by CSC in collaboration with LexisNexis®, Symonds & O’Toole on Delaware Limited Liability Companies provides workable solutions for even the most complex transactions, and practical insight into case law interpreting the statute, to help attorneys and legal professionals provide informed representation and advice to clients looking to make the most of their Delaware LLCs.
The newly updated treatise includes discussion of the Delaware Limited Liability Company Act and related case law, legal analysis and practice recommendations, and appendices that contain the current Delaware LLC Act, historical versions of the statute, legislative history, and up-to-date forms. Topics include:
About the authors
Authors Robert L. Symonds, Jr. and Matthew J. O’Toole, considered among the foremost authorities on Delaware LLCS, are partners at Potter Anderson & Corroon LLP in Wilmington Delaware. Mr. Symonds is one of the original drafters of the Delaware Limited Liability Company Act. He is a former chairman, and along with Mr. O’Toole, is a long-time member of the Delaware State Bar Association committee responsible for proposing amendments to that statute and to Delaware’s limited partnership and general partnership laws.
Mr. O’Toole is the immediate past chairman of the Council of the Corporation Law Section of the Delaware State Bar Association, which monitors and proposes amendments to the General Corporation Law of the State of Delaware.