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BankruptcyThe Bankruptcy StrategistFeatures

Can A LLC President File for Bankruptcy Over Objections of Debtor’s Other Members?

By Lawrence J. Kotler and Drew S. McGehrin
December 01, 2024

By Lawrence J. Kotler and Drew S. McGehrin
Through a unilateral bankruptcy filing, a president and manager of a limited liability company sought to utilize the Chapter 11 process and sell a debtor’s business as a going concern over the objection of the debtor’s other members. In this case, the issue was whether the president was authorized to do so. In a recent decision issued on Sept. 30, 2024, the U.S. Bankruptcy Court for the Eastern District of Michigan examined this fundamental question of basic corporate governance and provided guidance to bankruptcy practitioners who may face similar questions in the future.

Facts and Procedural History

The Debtor and Its Operating Agreement

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