US case on derivative claims on behalf of LLCs

In the recent US case of Hopkins v Ackerman the court ruled that derivative claims* could not be brought on behalf of an LLC which had been cancelled.**

Commentary on the case by US law firm Patterson Belknap can be found at:

https://www.pbwt.com/ny-commercial-division-blog/commercial-division-closes-door-to-derivative-claims-on-behalf-of-cancelled-llc/

* A derivative claim is one brought by a member of a firm on its behalf when a wrong has been done to the firm but the firm itself has not taken action against the wrongdoer (often because the wrongdoer controls the firm). In the UK, a derivative claim may be brought in the name of an LLP pursuant to the exceptions to the rule in Foss v Harbottle, or in the name of a company pursuant to ss260 et seq of the Companies Act 2006 - provisions which have not been applied to LLPs, hence the continued application of the common law).

** Cancellation is the final stage in the termination of a US LLC after dissolution and winding up.

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Second Annual Conference of the Partnership, LLP and LLC Law Forum 10 January 2019

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