Chancery Interprets LLC Agreement as Not Eliminating Fiduciary Duties

Tue, 03 Mar 2026 12:30:36 +0000

Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on Tuesday, March 3, 2026

Editor's Note:

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven J. Steinman, Randi Lally, and Erica Jaffe, and is part of the Delaware law series; links to other posts in the series are available here.

In Calumet Capital Partners LLC v. Victory Park Capital Advisors LLC (Jan. 29, 2026), the Delaware Court of Chancery, at the pleading stage of litigation, found it reasonably conceivable that, after Victory Park (the “Investor”) invested in Calumet’s lending business (the “Lender”), the Investor—“with and through” its employee, whom it had appointed to the Lender’s board of managers—engaged in a scheme to undermine the Lender and establish a competing lending business (“Bespoke Capital”). The court interpreted the Lender’s LLC Agreement as not having fully eliminated fiduciary duties for the managers; and found it reasonably inferable from the alleged facts that the Employee, by harming the Lender for the Investor’s benefit, had breached his fiduciary duties to the Lender, aided and abetted by the Investor.

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The Harvard Law School Forum on Corporate Governance

Chancery Interprets LLC Agreement as Not Eliminating Fiduciary Duties