Chancery Court Denies Creditors’ Derivative Standing Under Delaware LLC Act

In a case that may limit the rights of lenders and other creditors against managers of Delaware LLCs, and provides added protections for insiders of Delaware LLCs, the Delaware Court of Chancery this month held that a creditor of an insolvent LLC lacked standing to bring derivative claims under the Delaware Limited Liability Company Act. In re CML V v. Bax points out an important difference between available remedies for creditors of Delaware corporations and Delaware LLCs. While this case may be subject to appeal, no appeal has yet been filed. To read the full alert, please click here. Courtesy of Bingham's Financial Restructuring Practice