Advising on a U.S. partnership dispute and drafting an LLC operating agreement

In a matter where partners who had jointly acquired and were operating a restaurant business in the United States came into dispute over management control and their ownership interests, we reviewed the legal relationships involved and drafted an LLC operating agreement.

The key issues were the partners' capital contributions and ownership interests, the exercise of management control and authority over major decisions, and access to and control over company funds.

Other issues included the loan obligations and personal guarantees incurred to acquire the business, profit distribution, and the valuation of interests and terms of withdrawal when the partnership ends.

We reviewed the existing partnership, the business acquisition, and the financing structure, and advised on the partners' rights and obligations and the risk of disputes between them.

On that basis, we drafted an LLC operating agreement setting out voting requirements for major management matters, joint management of funds, profit distribution, procedures for transfer of interests and withdrawal, valuation of interests, and the internal allocation of loan obligations and rights of reimbursement.

We turned the issues of management control, financial control, buyout of interests, and allocation of liability that had caused problems in the existing partnership into specific contract provisions, and prepared an operating agreement that protects the partners' rights and helps prevent future disputes.

Related U.S. practices: Corporate & Business Advisory, Business & Commercial Disputes