Client Alert

Delaware Court Holds That Creditors Lack Standing to Pursue Derivative Claims On Behalf of Insolvent LLCs

November 15, 2010

Kevin C. Logue and Robin Arzón

On November 3, 2010, in CML V, LLC v. Bax, et al., (C.A. No. 5373-VCL), 2010 Del. Ch. LEXIS 220 ("CML"), Vice Chancellor Laster of the Court of Chancery of the State of Delaware held that unlike in the corporate context, where creditors may pursue derivative claims on behalf of insolvent corporations, creditors lack standing to pursue derivative claims on behalf of Delaware limited liability companies ("LLCs"), even in insolvency.

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