Prior posts have addressed the dissolution of Delaware corporations under the Delaware General Corporation Law.  This post will focus on the standard for obtaining a court-ordered dissolution of a Delaware limited liability company, under the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101, et. seq. (the “DE LLC Act”).

Generally speaking, a Delaware LLC will voluntarily dissolve upon the occurrence of certain events, including at a time specified in the LLC agreement, upon the happening of events specified in the operating agreement, or the vote of at least two-thirds of members.  6 Del. C. Section 18-801(a)(1)-(3).

However, a manager or member of an LLC can petition the Court to order a dissolution of the company.  This may be an advantageous course of action when the members or managers of the LLC are deadlocked, or when the operations of the business cannot proceed given shareholder disagreements.

The standard to obtain a court dissolution is governed by 6 Del. C. Section 18-802, which states as follows:

On application by or for a member or manager the Court of Chancery may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with a limited liability company agreement.

6 Del. C. Section 18-802.

The “reasonably practicable” standard to dissolve a Delaware LLC has been addressed by the Court of Chancery in several instances.  Stay tuned for subsequent posts that will address this standard to obtain a court-ordered dissolution of a Delaware limited liability company.

If you would like to speak to a litigator in Fox Rothschild’s Delaware office, please reach out to Sid Liebesman (302) 622-4237 or Seth Niederman (302) 622-4238.