Lach v. Man O’ War, LLC
ISSUE[S]: Does the restructure of a partnership to that of a LLC constitute a conversion, and therefore require the consent of all members, or qualify as a reorganization? And, Can decisions made by general partners violate the fiduciary duties owed to limit partners?
RULE[S]: KRS 275.370- The full consent of all members of a partnership is required for the conversion of a partnership to a limited liability company, unless otherwise stated in a partnership agreement.
KRS 275.375 - (1) Any converted partnership shall remain the same entity that existed prior to the conversion.” (2) “[property] shall remain vested in the converted [entity] and shall continue obligations of the converted [entity].”
KRS 362.2-1201 ULPA: In situations where uniformity must be maintained, the courts may account the “Official Comments” of the ULPA (even if the act has not been fully enacted). …show more content…
The converting and the converted organizations are the same entity.”
KRS 362.490 - General partner[s] have no authority to “(2) do any act which would make it impossible to carry on the ordinary business of the partnership.”
K62.490- General partners have no authority to “(2) do any act which would make it impossible to carry on the ordinary business of the partnership.”
APPLICATION[S]: Lach has argued that the partnership has violated KRS 275.370 by converting the partnership to a LLC without the full consent of all members. Wiseman has argued that the partnership was never converted. Wiseman states that the partnership simply dissolved once a new entity was created, the LLC Man O’ War, and received all the assets of the partnership through a one-time