In re Carlisle Etcetera LLC

In 2012, Well Union Capital Limited (WU Parent) and Tom James Company (James) formed Carlisle Etcetera LLC (Carlisle). A James executive was appointed as Carlisle’s CEO, and through the CEO, James controlled Carlisle’s day-to-day operations. After Carlisle was formed, WU Parent transferred its member interest to a wholly owned subsidiary called Well Union U.S. Holdings, Inc. (WU Sub). Under the Delaware Limited Liability Company Act (the LLC Act), the transfer rendered WU Sub an assignee, rather than a member. When the relationship between US Parent and James deteriorated, both sides agreed that one needed to buy out the other, but they could not agree on a buyout procedure or price. During negotiations over the buyout, James sought to use its privileged position to extract concessions from WU Sub. WU Sub petitioned the Court of Chancery to dissolve Carlisle. James filed a motion to dismiss, arguing that because WU Sub was an assignee rather than a member, it lacked standing to petition for statutory dissolution under the LLC Act. The Supreme Court denied the motion, holding (1) WU Parent and WU Sub lacked standing to petition for statutory dissolution under the LLC Act; but (2) WU Sub had standing to seek dissolution in equity. View "In re Carlisle Etcetera LLC" on Justia Law