Articles Posted in Corporate Compliance

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Creditors-plaintiffs sued a Colorado LLC claiming the LLC authorized a distribution to members that bankrupted the company and left it unable to pay them. The defendants moved to dismiss plaintiffs' claims of unlawful distribution and breach of fiduciary duty, arguing that no creditor had a right to sue for the distribution, nor a right to claim breach of fiduciary duty. The trial court granted the defendants' motion; the appellate court reversed. Upon review, the Supreme Court concluded that under Colorado law, LLC members are liable to the LLC, but not the LLC's creditors. Furthermore, the Court concluded that the manager of an insolvent LLC does not owe the creditors the same duty an insolvent corporation's directors owe a corporation's creditors. Accordingly, the Court reversed the appellate court and reinstated the trial court's order. View "Weinstein v. Colborne Foodbotics, LLC" on Justia Law