Delaware Business Litigation Report

Court Of Chancery Explains How To Interpret Interlocking LLC Agreements

Godden v. Franco, C.A. 2018-0504-VCL (August 21, 2018)

When multiple LLC agreements for several entities contain provisions that relate across the entities, deciding how to interpret those provisions is a potential problem. As this decision points out, the separate identities of the entities need to be respected. Nonetheless, when the LLC agreements create contract rights, those rights can be enforced, just as a stockholders’ agreement can be enforced to require action by the signatories to the agreement.

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