New York courts are frequently called upon to resolve disputes over whether a limited liability corporation (LLC) should be dissolved. The dissolution of New York LLCs is governed by Article 7 of the New York Limited Liability Company Law (LLCL). Section 702 thereof provides that, as one ground, judicial dissolution may be decreed “whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.” Two primary questions drive the determination of whether dissolution is proper under the provision. First, does the petitioner seeking judicial dissolution have standing to request that relief? And, second, is it “reasonably practicable” for the LLC to continue fulfilling its organizational purpose?

Standing to Seek Dissolution

Section 702 limits standing to seek judicial dissolution to those applications brought “by or for a member.” Justice Shirley W. Kornreich of the New York County Commercial Division has held that non-members lack standing to seek judicial dissolution. JG Club Holdings, LLC v. Jacaranda Holdings, LLC, 35 Misc. 3d 1217(A) (N.Y. Co. 2012); see also 762 Park Place Realty, LLC v. Lehrer, 161 A.D.3d 1135, 1137 (2d Dep’t 2018) (application must be made either by a member or “on behalf of a member of the LLC”); Matter of Cline v. Donovan, 72 A.D.3d 471, 472-73 (1st Dep’t 2010) (dissolution should not have been granted summarily due to question of fact as to whether petitioner was member of LLC). No New York decisions have been found analyzing the circumstances under which a petition for judicial dissolution might be brought “for a member” or “on behalf of a member” rather than by the member themselves.

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