North Carolina Business Court Denies LLC Dissolution Dismissal
A judge has ruled that a lawsuit seeking to dissolve two funeral service LLCs may continue to move forward.
Updated on Oct. 26, 2026 in Public Companies
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The North Carolina Business Court denied a motion to dismiss a lawsuit aimed at dissolving two funeral service LLCs. The plaintiff alleges that the defendant, an equal manager, engaged in the misuse of company funds and assets.
Why it matters
The ruling allows a dispute between equal LLC managers to proceed, highlighting legal pathways for members to protect their interests when business conduct becomes allegedly unmanageable. This case underscores the court's role in intervention when operations under an operating agreement are no longer practical.
The litigation involves the status of 2 separate funeral service LLCs. The court must now determine if conditions necessitate liquidation to preserve the rights of the equal members.
The players
Adam M. Conrad
He is the Chief Judge of the North Carolina Business Court who presided over the motion to dismiss in Davis v. McHatton.
The details
The plaintiff claims the defendant took unilateral control, diverted staff, and spent company funds on personal expenses. While the defendant argued he intended to buy out the plaintiff to resolve the conflict, the court ruled against dismissing the case.
Timeline
The North Carolina Business Court issued the ruling on October 26, 2026.
Market Landscape
This case reflects broader judicial scrutiny of governance disputes within closely held corporations. It signals a shift toward court intervention when internal management controls fail to protect minority or equal stakeholder interests.
This ruling establishes that business partners may face court-ordered dissolution if mismanagement allegations are proven. It emphasizes the importance of formalizing and adhering to operating agreements to avoid costly legal intervention.
The takeaway
Disputes between equal LLC members can lead to prolonged court battles if internal management agreements are ignored. Partners should maintain rigorous financial records to defend against allegations of asset diversion or unilateral control.
Further reading
For more on corporate legal developments, visit the Public Companies section.
Source note: This article includes information reported by North Carolina Lawyers Weekly.
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