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:

* 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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