When Can LLCs Appoint A Special Litigation Committee?

September 20, 2017

In a decision handed down on Aug. 15, 2017, the New York Appellate Division, First Department, endorsed the practice of the appointment of a special litigation committee (SLC) by a limited liability company (LLC) “at least where explicitly contemplated” by the LLC’s operating agreement. However, where the operating agreement does not explicitly provide for such an appointment or otherwise evince intent to delegate core governance functions to a nonmember, the LLC cannot appoint an SLC that has authority over a major decision of the LLC.

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