Issue

Limited liability companies—grounds for judicial dissolution—managerial deadlock—continued operations not practicable—factors adopted

Summary

In a case involving two family-owned limited liability companies (LLCs), which together owned 68 acres of undeveloped land (the Property), the North Carolina Business Court did not abuse its discretion by judicially dissolving the LLCs pursuant to N.C.G.S. § 57D-6-02(2)(i) where undisputed evidence showed that, because the only two managers of the LLCs were at a complete impasse regarding operating decisions–resulting in no development or active use of the Property for its intended purpose for several years, even though there was some continued financial feasibility of the LLCs–and the LLCs' Operating Agreements did not provide a mechanism for breaking the deadlock, it was "not practicable" for the LLCs to continue operating. The Supreme Court defined the statutory term "not practicable" as "unfeasible" rather than "impossible," and adopted a six-factor balancing test for determining whether it was not practicable for an LLC to continue in accord with its operating agreement.

Summary from the North Carolina Reports digest (official subject index). Read the opinion →