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ARTICLE · 31 JANUARY 2025

Help Comes From An Unexpected Place In LLC Deadlock Dissolution: The Third Department

Farrell Fritz
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Join me if you know this refrain: In New York, deadlock is not an independent ground for LLC dissolution.

United StatesCorporate/Commercial Law
Becky (Hyun Jeong) Baek
Becky (Hyun Jeong) Baek

Join me if you know this refrain: In New York, deadlock is not an independent ground for LLC dissolution.

But...

Almost exactly two years ago from today, Peter Mahler published a post titled: "Has the Time Come for New York to Follow Delaware and Officially Pronounce Deadlock as Ground for LLC Dissolution?" where he explored the post-Matter of 1545 Ocean Avenue landscape of the role of deadlock as an independent ground for dissolution in New York (not allowed), as compared to Delaware (allowed). NY and DE take these differing approaches even though both statutes contain virtually the same language permitting court-ordered dissolution "whenever it is not reasonably practicable to carry on the business in conformity with" the LLC's articles of organization or operating agreement (NY LLCL §702 and DE LLC Act §18-802).

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