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VanWinkle v. Walker: Did the Members Intend to Waive Limited Liability?

A hallmark of the limited liability company is that the members enjoy limited liability from the debts and obligations of the company. In fact, it is such a central component that it appears in the name of the form. Generally speaking, it is now accepted that the limited liability enjoyed by the members of an LLC is the same as the limited liability enjoyed by the shareholders of a corporation. What is not oft appreciated is that while it is rather difficult in a corporation for a shareholder to waive limited liability, it is rather easier for an LLC member to do so. It provides that, inter alia, that a member may waive their limited liability by either a provision in the articles of organization or in a written operating agreement.

Last August, in a case styled VanWinkle v. Walker, the Court of Appeals considered an LLC operating agreement that was at best ambiguous. Because of the language employed, which paraphrased (but did not exactly track) the statutory language, it was held that the members had waived their limited liability. That decision was not appealed to the Kentucky Supreme Court. In an article published in the Journal of Passthrough Entities, I have published VanWinkle v. Walker: Did the Members Intend to Waive Limited Liability?(March/April 2019). The article can be accessed via the link below. In this article, I both provide an in-depth analysis of the decision (referencing as well the briefs filed with the Court of Appeals) and offer a critique of the decision. I hope you find it helpful.

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