Journal of
Corporate
Renewal
Sept
2017
continued on page 22
Trusa Provides New Guidance in
Developing Distressed LLC Case Law
Compared to the case law governing distressed corporations, the case law
governing distressed limited liability
companies (LLCs) is in its nascent
stages. This is largely attributable to
the fact that LLCs are a comparatively
newer form of corporate structure
and thus have lesser developed
corporate governance rules to
provide direction and guidance.
Beginning in 2010 with the Delaware
Court of Chancery’s decision in CML
V, LLC v. Bax, 1 Delaware courts have
issued several rulings providing
guidance to creditors, members, and
managers in distressed Delaware
LLCs regarding matters such as
who has standing to pursue derivate
claims of such LLCs and other
remedies that may be pursued by
creditors. These decisions, of course,
Journal of
Corporate
have national implications for LLC
corporate governance, given that a
number of other states model their
LLC laws after Delaware’s LLC Act,
the frequent use of Delaware LLCs
for businesses based throughout
the country, and the prominence of
the Delaware courts for corporate
and alternative entity law.
