Delaware Supreme Court Rules on Minority Members’ Rights in the Sale of LLCs

In Oxbow Carbon & Minerals Holdings, Inc. v. Crestview-Oxbow Acquisition, LLC, the Delaware Supreme Court affirmed in part and reversed in part a decision by the Court of Chancery that used the implied covenant of good faith and fair dealing to permit minority members (the “Minority Members”) of a Delaware limited liability company (the “LLC”) to cause a sale of the LLC despite the right of certain holders (the “Small Holders”) to block the sale. 

The dispute in this case relates to the proper interpretation of the Minority Members’ rights, under the terms of the LLC’s limited liability company agreement (the “LLC Agreement”), to cause a sale of the LLC so long as each member of the LLC has received distributions equal to or higher than 1.5 times such member’s initial capital contributions. 

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Tarik J. Haskins, “Delaware Supreme Court Rules on Minority Members’ Rights in the Sale of LLCs,” Month-In-Brief: Corporations, LLCs & Partnerships, ABA Business Law Today (February 2019).