Update: Newly Passed Delaware Law Will Necessitate Important Updates to Credit Agreements


On July 23, 2018, the State of Delaware amended the Delaware Limited Liability Company Act to allow a Delaware limited liability company to divide itself into two or more LLCs (effective as of August 1, 2018). The original LLC will have the ability to allocate its assets, liabilities, rights and duties among the newly divided LLCs pursuant to a “plan of division” and then terminate or continue its own existence. Following the division, each LLC would own the assets and be obligated on the liabilities of the original LLC only to the extent they are allocated to it by the plan of division (unless the plan of division constitutes a fraudulent transfer). The amendment provides that if an LLC formed prior to August 1, 2018 is a party to any agreement entered into prior to that date containing a restriction on mergers, consolidations or transfers of assets by such LLC, then such restriction will be deemed also to apply to any division by such LLC. Click here to read the full Orrick-authored alert.