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ARTICLE · 13 MAY 2024

Chancery Orders LLC's Dissolution As Sanction

Morris James LLP
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The Court of Chancery has broad power to address litigation misconduct. This sanctions order arose out of litigation concerning a loan to a start-up Delaware LLC in the medical research field.

United StatesInternational Law
Albert J. Carroll
Albert J. Carroll
Barnaby Grzaslewicz
Barnaby Grzaslewicz

Kaufman v. DNARx LLC, C.A. No. 2022-0968-KSJM; C.A. No. 2022-0982-KSJM (Del. Ch. Dec. 29, 2023) (ORDER)
The Court of Chancery has broad power to address litigation misconduct. This sanctions order arose out of litigation concerning a loan to a start-up Delaware LLC in the medical research field. The litigation misconduct by the defendant LLC included lying, destroying evidence, and ignoring numerous court orders. Finding the defendant's actions egregious and deplorable, the Court entered an extreme sanction—dissolution of the LLC and a liquidation process overseen by a court-appointed receiver.

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