Delaware Business Lawyer Blog

When 2 or more owners of a Delaware limited liability company disagree on the direction their business should take, it makes a world of difference if they have an operating agreement. If the agreement was prepared properly, it contains a method for resolving disputes. If there is no operating agreement, one of the owners might file a lawsuit in the Delaware Court of Chancery seeking the Court’s help in dissolving the LLC.

Delaware law doesn’t really specify what a court must consider in evaluating the "reasonably practicable" standard. Nevertheless, the courts which have considered the issue usually look at the following factors:
(1) the members' vote is deadlocked at the Board level;
(2) the operating agreement gives no means of navigating around the deadlock; and
(3) due to the financial condition of the company, there is effectively no business to operate.

It’s very easy to form an LLC in Delaware. The first thing you have to do is decide on your company’s name. Whatever name you choose must contain the words “limited liability company” or the abbreviation “LLC.” You’re allowed to include in the name any of the following words: “Company," "Association," "Club," "Foundation," "Fund," "Institute," "Society," "Union," "Syndicate," "Limited" or "Trust,”or you can use an abbreviation for any of the words.

Although the formation of an LLC is rather simple, the next step is to create an operating agreement that governs the conduct of the business, and explains the rights of each of the partners. The operating agreement is extremely important, and should always be prepared by an experienced attorney.