Litigation

Books and Records Demand in the LLC Context

By Francis G. X. Pileggi, Esq.

In TravelCenters of America v. Brog,  2008 WL 868107 (Del.Ch., March 31, 2008) , read opinion here, the  Delaware Chancery Court addressed  issues relating to a demand for books and records of an LLC. The books and records claim was presented as a counterclaim in a suit that involved the issue of an advance bylaw notice. In dismissing the counterclaim without prejudice, the court emphasized the long line of Delaware cases that stand for the position that a books and records claim is a summary proceeding that should be handled distinct from other ancillary issues. Thus, the court determined that in light of the principle complaint that was already filed and given expedited treatment, the books and records claim could not be addressed distinct and apart from other issues in the primary action.

 Notable also was the court's observation that due to the fewer number of reported decisions involving books and records demands in the LLC context, compared to the corporate context,  the court looks to the plethora of opinions concerning demands for books and records in the corporate context under Section 220. Note, however, that the provisions of the Delaware LLC Act regarding a books and records demand are far different than the analogous provisions in Section 220 of the DGCL. Here is the money quote on the general point from footnote 2 in the instant decision:

 "Because of a lack of reported decisions in the LLC context, the Court may look to cases interpreting similar Delaware statutes concerning corporations and partnerships.” (citing Somerville S Trust v. USV Partners, LLC., No. 19446-NC, 2002 WL1832830, at *5 n. 4 (Del. Ch. Aug. 2, 2002)).

Full post as published by Delaware Corporate and Commercial Litigation Blog on April 07, 2008 (boomark / email).