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LLC operating agreements may be the most commonly document drafted, reviewed and negotiated by transactional counsel. These documents define the governance, information and liquidation rights of members, allocate economic rewards, sometimes establish restrictions on members or their interests, and can assign or alleviate liability. The tax provisions, too, are highly complex, defining allocations of tax attributes and rights to cash and property distributions. Fiduciary duties may also be modified in a way that is not possible in other types of entities. This program will provide you with a practical guide to drafting the most important provisions of LLC operating agreements.
Day 1:
Drafting the most important provisions of LLC operating agreements
Planning for different types of capital contributions – capital v. services, current contributions v. future capital calls
Management provisions depending on whether the LLC is member-managed v. manger-managed LLCs
Fiduciary duties of members, modifications, and the “LLC opportunity doctrine”
Restrictions on transfers of capital and profits interests
Relationship between tax allocation and property distribution provisions, including IRC Section 704(b) accounting
Day 2:
Drafting allocation provisions for maximum tax benefit and to secure the safe harbor
How “payments to member” (not distributions) are treated for financial v. tax purposes
Drafting ordinary distributions, minimum tax distributions, waterfall distributions, liquidating distributions
Rights of first refusal, rights of first offer, buy-sell provisions – understanding the alphabet soup of exit alternatives
Liquidations of the entity and sale of an individual member’s interests
Speakers:
Anthony Licata is a partner in the Chicago office of Taft Stettinius & Hollister LLP, where he formerly chaired the firm’s real estate practice. He has an extensive practice focusing on major commercial real estate transactions, including finance, development, leasing, and land use. He formerly served as an adjunct professor at the Kellogg Graduate School of Management at Northwestern University and at the Illinois Institute of Technology.
Richard Alderman is from the Chicago office of Taft Stettinius & Hollister LLP, where he focuses his attention on analyzing the tax consequences of complex business transactions, including corporate mergers and acquisitions, partnership transactions, trusts, and public and private debt and equity offerings. He has special expertise in the tax aspects of LLCs, partnerships, REITs, private investment funds, employee benefits, and executive compensation. He also advises clients regarding tax and non-tax business structuring issues arising in the course of operations and in connection with transactions.
Mr. Alderman has structured complex business and commercial transactions, with respect to both tax and corporate issues, including acquisitions, dispositions, joint ventures, private equity investments, real estate syndications, gaming-industry transactions, and other private and public offerings. He also has designed complex executive compensation award arrangements and succession plans.
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