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Connectiuct Business Litigation Blog
Commentary on lawsuits and legal issues impacting Connecticut businesses. Authored by experienced business litigation attorney, Kane Bennett of Aeton Law Partners, LLP.
HOW TO DISSOLVE A LIMITED LIABILITY COMPANY IN CONNECTICUT
Limited Liability Companies in Connecticut, and every other state, are created by statutory law. General Statutes Title 34 governs the creation and governance of LLC’s in Connecticut. Specifically, General Statutes sections 34-206 sets forth the means of dissolving an LLC. The LLC may be dissolved by: At the time or upon the occurrence of events specified in writing in the articles of organization or the operating agreement; If not provided in writing under #1, then by affirmative vote, approval, or consent of at least a majority in interest of the members; or By the entry of a judicial decree of dissolution. The operating agreement for an LLC is the document the members execute to govern the affairs of the LLC. Many times they are drafted by an attorney. Operating agreements are not required. However, they are a good idea for a variety of reasons, including the issue of dissolution. It is also a good idea to have an attorney draft the operating agreement rather than resorting to Legalzoom. I have seen many instances of operating agreements from Legalzoom that simply do not cover the likely problems members of an LLC face when there is more than one member. If members of an LLC do not have an operating agreement that defines how the company may dissolve and wind up its affairs, then by law the decision is controlled by General Statutes. This essentially means a majority vote can dissolve the LLC. I recently came across an operating agreement for an
Primer on Interpleader Actions Under Connecticut Law
The Connecticut Supreme Court (318CR76) recently issued a decision that provides a good overview of Connecticut’s interpleader law. An action in interpleader is an equitable claim attorneys bring on behalf of clients to resolve ownership over disputed claims to property or money. The typical case involves a situation where one party is the holder of money and there are two other parties fighting over ownership to the money. Basically, the holder of funds is giving up the money to the court and throwing up his or her hands and saying “figure it out judge.” To avoid getting sued by either or both parties claiming ownership, the holder of the disputed funds files an interpleader action in state superior court. The purpose of interpleader law is to avoid multiple lawsuits and to provide a more efficient means of resolving a dispute where the holder of money or property has no real interest in the outcome. In its recent decision, the supreme court set forth the history of the interpleader action in Connecticut. Initially, interpleader actions were based on Connecticut’s common law. However, over 100 years ago, the Connecticut legislature specifically enacted a statutory cause of action for interpleader in section 52-484 of the General Statutes. Section 52-484 states ‘‘[w]henever any person has, or is alleged to have, any money or other property in his possession which is claimed by two or more persons, either he, or any of the persons claiming the same, may bring a complaint in equity, in the nature of a bill of interpleader, to any court
Dissolving A Corporation Under Connecticut Law
Under Connecticut law, there are various methods attorneys may use to dissolve or terminate a corporation. It is referred to as dissolution of the corporation. A dissolved corporation continues its corporate shell existence but stops carrying on business except where necessary to wind up the affairs of the company. Winding up typically involves liquidation by collecting assets, disbursing assets, selling of assets and property, and discharging liabilities. Corporate dissolution is governed by Connecticut General Statutes Chapter Title 33, Chapter 601, Part XIV. Dissolution can be accomplished by any of the following: Dissolution by the original incorporators or directors under Connecticut General – voluntary Dissolution by the board of directors and shareholders – voluntary Dissolution by the Secretary of State – administrative Dissolution by a shareholder proceeding in court – judicial Dissolution by a creditor proceeding in court – judicial Dissolution by a company proceeding in court – judicial The first two methods are known as voluntary dissolution. Typically, this means the company directors propose dissolution to the shareholders of the company. The board typically notifies the shareholders of a meeting to address dissolution. If the proposal passes, a certificate of dissolution is filed with the Secretary of State. A company may elect to revoke the dissolution with 120 days by following the same procedure. A company may have a transaction or business law attorney assist with the necessary documents and voting records. The company may then proceed with winding up the affairs of the company which requires following the statutory
Do Members of LLCs Owe A Fiduciary Duty To Each Other in CT?
A limited liability company is essentially a combination or mix of a corporation and a partnership. The LLC as an entity provides the flexibility of a partnership with the ability to govern and create ownership interests similar to a corporation. The legislature codified the framework for LLCs in Connecticut in Title 34, Chapter 613 of the General Statutes. The statutory frameworks permits the owners or members of LLCs to include specific governance provisions in a document called an “operating agreement.” Many times members use an attorney to draft the operating agreement. The operating agreement may cover a variety of topics including: duties and rights of members and managers finance distributions ownership and transfer of property admission and withdrawal of members lawsuits by and against the company merger, consolidation and conversion dissolution If the members of an LLC fail to address any of these issues, the provisions for the Connecticut general statutes apply as a default. With some exceptions, the statutory framework basically provides for simple majority control. The failure to address these issues typically results in significant control in the majority member. So, if a minority member wants some aspect of control on these topics, the member would be well advised to take care of it by using an attorney to negotiate or draft provisions in the operating agreement with protections as part of the admission process. Notwithstanding the above, members holding a minority ownership interest in an LLC continue to have rights that may provide some protection depending on
Seldom Used Holiday Rule Will Not Save Your Lawsuit Filing Deadline
Our court system is based upon a series of deadlines. There are deadlines for everything from starting a lawsuit (statute of limitations) to returning the lawsuit papers to court (6 or 12 days before the return date) to filing an appearance (2 days after the return date). There are deadlines for every aspect of a case and litigation attorneys live by deadlines. However, the fact is, some deadlines are more meaningful than others. Unfortunately, it takes attorneys years of practice to figure out the different treatment by judges for different deadlines. More importantly, there are some deadlines that hurt your case if missed, and others that kill your case. The statute of limitations will kill your case if missed. But, what happens if you need to serve your lawsuit on a defendant but it is a legal holiday? Or, what if the deadline to pay a promissory note falls on Christmas and you fail to pay? Or, what if the day you are supposed to file something in court, the court is closed? There are all kinds of rules and grace periods that apply in various cases. In law school, students learn about the mailbox rule which means the papers are delivered on the date they are put in the mail, not the date received. Some states will count business days and not weekend or holidays at all. Other states will provide different methods of counting days for legal papers and build in grace periods. And, to add to the
Lost Profits Must Be Reasonably Certain for Breach of Contract Claims
The burden to prove damages is always on the Plaintiff, or the party that brings the lawsuit. Many times I receive calls from prospective clients who believe they have significant amount of damages. However, under Connecticut law damages are only recoverable to the extent that the evidence affords a sufficient basis for estimating their amount in money with “reasonable certainty.” Proving damages in a business lawsuit does not require exactitude but a litigant cannot base a claim solely on subjective opinion. Although there is no precise formula to prove the amount of damages, a court will not permit an award of damages based on speculation or conjecture. In certain cases, assumptions are permitted, but the assumptions must be reasonable and relate to the facts of the case. As a result, before proceeding with a breach of contract case, an attorney will want to explore if the prospective client can prove damages. Without provable damages, there is likely no case worthy to pursue if money damages are at issue. The damages also must relate to the specific cause of action in the case. There are different elements of recoverable damages for different types of cases. Some cases carry with it statutory damages, and other cases are governed by Connecticut’s common law or history of court decisions. One category of frequently claimed damage for breach of contract is loss of future profits or loss of anticipated profits. Generally, in a breach of contract case, you seek to put the injured party in
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Connecticut Business Litigation is the most well-read litigation blog in the state of Connecticut. Founded by Attorney Kane Bennett in 2009, a pioneer in Attorney Marketing in the state of connecticut