Thursday, November 21, 2013

Broyhill v. DeLuca case brief

Broyhill v. DeLuca case brief summary
194 B.R. 65 (1996)


CASE SYNOPSIS
Plaintiffs sought a declaration that defendant debtors were properly removed as managers for a limited liability corporation and plaintiffs properly appointed a successor manager in a chapter 11 bankruptcy proceeding.

CASE FACTS
Plaintiffs sought a declaration that defendant debtors were properly removed as managers for a limited liability corporation prior to defendants' chapter 11 bankruptcy petition and that plaintiffs properly appointed a successor manager.

DISCUSSION
  • The court held that plaintiffs' actions were proper because defendants' chapter 11 petition effectively terminated their membership in the limited liability company. 
  • Additionally, the court found that under the operating agreement, plaintiffs, as majority membership interest holders, were given the right to elect to continue the business of the company and select a new manager.

CONCLUSION
The court determined that defendant debtors were properly removed as managers and that plaintiffs appropriately appointed a successor manager because plaintiffs held a majority of the membership interest and defendants' filing of a chapter 11 bankruptcy petition terminated their membership.


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