The plain language of Section 18-802 of the Delaware LLC Act provides that “member[s] and manager[s]” have statutory authority to petition for dissolution of a Delaware limited liability company “whenever it is not reasonably practicable to carry on the business in conformity with a limited liability company agreement.” However, the Delaware Court of Chancery recently held in In re Carlisle Etcetera LLC that the right to petition for dissolution may, “when equity demands,” be extended to a non-member assignee of an LLC membership interest. This holding was reached despite the nonmember assignee having no such right under either the LLC agreement or the LLC Act, placing considerable emphasis on the equitable principles that underlie the court of chancery’s jurisdiction over Delaware alternative entities.
This article discusses the background of In re Carlisle Etcetera LLC and key lessons and potential consequences of the court’s decision.