Wilmington, Del. (November 2, 2022) - Wilmington Partner Sean Brennecke recently authored an article for the Delaware Business Court Insider (part of Law.com) titled, "Chancery Decision Reaffirms 2 Principles of Del. Alternative Entity and Contract Law." The article discusses the implications of a recent post-trial decision that the Delaware Chancery Court issued in Avgiris Brothers v. Bouikidis, 2022 Del. Ch. LEXIS 282 (Del. Ch. Sept. 30, 2022), a case that involved the interpretation of an LLC agreement.
Mr. Brennecke opens the article by observing that the court's decision in Avgiris "is a useful reminder of the benefits of a well-drafted LLC agreement and reaffirmed two bedrock principles of Delaware alternative entity and contract law—parties are given wide latitude to order their affairs through a LLC agreement and that Delaware courts will strictly construe the language of those agreements."
The article goes on to describe the facts of the case, explaining that the plaintiffs and defendants – who endeavored to open a fast-food casual Greek restaurant in Philadelphia – entered into an LLC agreement. Approximately three years later, the relationship between the parties soured and the Avgiris Brothers ultimately filed a complaint in Delaware. They sought a declaration that Avgiris owned the majority of the membership interest in the LLC and had the power to remove the Bouikidis Brothers as managers. They also sought an order directing the defendants to return all company property in their possession.
In discussing the court's analysis, Mr. Brennecke explains that the court relied upon the longstanding principle that "'the parties to an LLC agreement have substantial authority to shape their own affairs.'" He then describes how the court focused on the plain language of the LLC agreement to reject the defendants' arguments and issue a ruling in the plaintiffs' favor.
Mr. Brennecke concludes the article by noting, "While the holding may seem obvious given the language of the LLC agreement, [Vice Chancellor] Will's decision provides a valuable reminder about the importance of clarity in drafting LLC agreements and the narrow scope of permissible defenses in summary proceedings."
Mr. Brennecke, who recently joined Lewis Brisbois and discussed his move with Law360, is a member of the firm's Complex Business & Commercial Litigation, Corporate, and Bankruptcy & Insolvency Practices. For more than 15 years, he has represented corporations and alternative entities as well as their respective directors, officers, shareholders, members, and managers in complex litigation matters.
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