California Lawyers Association

Business Law Partnerships and Limited Companies Committee

Updates from the BLS Partnerships and Limited Companies Committee

Why is the dissolution of a limited liability company such a big deal? Or is it? Read more
A new online CLE program packed with practice tips and engaging discussions, presented by the Partnerships and Limited Liability Companies Committee (“PLLC”), is now available for download through the California Lawyers Association online catalog. Read more
From October 10 to 12, the California Lawyers Association hosted its 2019 Annual Meeting in Monterey. As part of the three-day, multi-disciplinary, state-wide calendar of events, the Partnerships and Limited Liability Companies Committee organized an event reviewing the past year. Chris Chediak, Soyeun D. Choi and Katie O’Neil Tran prepared content and Nina Hong acted as moderator. Read more
The seller in commercial real estate transactions is commonly a single-purpose LLC (limited liability company) set up to hold only one property.  After the property is sold, the owners (members) of the LLC usually take the proceeds (via distribution from the LLC) and dissolve the LLC.  Later when the buyer discovers a potential claim against the seller, say, for fraud and misrepresentation, the LLC has already been dissolved with no assets left. Fraud and misrepresentation is probably the most common… Read more
Background: Limited liability company (“LLC”) operating agreements commonly contain a clause on “Tax Matters Partner” (“TMP”). A TMP represents a partnership before the Internal Revenue Service (“IRS”) in all tax matters under the former Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”). The TEFRA audit rules apply to LLCs that are treated as partnerships for federal income tax purposes. LLCs with 10 or fewer members are exempt from these rules. Read more
When a client requests the preparation of a purchase or sale agreement for limited liability company (LLC) interests, counsel should always gather additional information prior to the preparation of such an agreement to obtain a complete picture of the exchange. Read more
A single member Limited Liability Company is dissolved when its sole member dies unless either of the following two exceptions apply:
(1) The operating agreement allows the continuation of the LLC and provides a method for determining the successor to the deceased member; or
(2) The heirs, successors, and assigns of the deceased member’s interest elect to continue the LLC within 90 days of the sole member’s death. Read more
Generally, non-competes are not enforceable in California as set forth in California Business and Professions Code section 16600 which states that, “[e]xcept as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” There are some limited exceptions to this rule. One of those exceptions is when an owner of a business sells the company’s goodwill or interests. Read more
In Boschetti v. Pacific Bay Investments Inc., 2019 Cal. App. LEXIS 193, filed on March 7, 2019, the California Court of Appeal, First Appellate District held that Boschetti, a partner of a California general partnership, could not enforce California statutory buy-out provisions upon dissolution of foreign limited partnerships and limited liability companies owned by the general partnership. Read more
The same virtues which make the Limited Liability Company (“LLC”) an attractive entity choice for investors -- limited liability and few required formalities -- also make it susceptible to management choices that may jeopardize the liability shield normally provided for its members and managers. Read more

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