The standard operating agreement, in Article 6, provides that the company shall be dissolved and its affairs wound up upon the first to occur of the following: a the latest date on which this company is to dissolve, if any, as set forth in the articles of organization, or by a judicial decree pursuant to section 702 of the New York limited liability company law.In determining applications for a judicial dissolution of a limited liability company, the court must first look to such company's operating agreement to determine "whether it is or is not reasonably practicable for the limited liability company to continue to carry on its business in conformity with the operating agreement" (Matter of 1545 Ocean Avenue, LLC v. Crown Royal Ventures, LLC, 72 AD3d 121 [2d Dept 2010] ; see LLCL § 702 ). Considered a statutory "default provision" for judicial dissolution (see Man Choi Chiu v. Chiu, 71 AD3d 646 [2d Dept 2010] ), LLCL § 702 is available whenever the court finds that it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement. Appellate case authorities have instructed that the court's initial analysis is one that is contract-based because the statute mandates an examination of the articles and operating agreement to determine the reasonable practicability of carrying on the business in conformity with these governing documents (see Matter of 1545 Ocean Avenue, LLC v. Crown Royal Ventures, LLC, supra; see also Matter of Shure v. S & S Eatery LLC, 35 Misc.3d 1218(A), 2012WL I52l9l5 (Sup.Ct., Nassau Co., 2012); Matter of Spires v. Lighthouse Solutions, LLC, 4 Misc.3d 428,436 [Sup.Ct., Monroe Co., 2004] ).
Judicial dissolution has been described as a remedy extreme in nature, and one that is to be granted sparingly. See In the Matter of the Dissolution of 1545 Ocean Ave., LLC, 72 A.D.3d 121, 129–130, 893 N.Y.S.2d 590 (N.Y.App.Div.2010); In re Arrow Inv. Advisors, LLC, 2009 WL 1101682, at *2 (Del.Ch.2009). In some cases, finding that it is “not reasonably practicable” for a company to continue operating requires a showing that the business “cannot continue ‘in accord with its ... operating agreement.’ ” 1545 Ocean Ave., 72 A.D.3d at 130, 893 N.Y.S.2d 590 (quoting Dunbar Group, LLC v. Tignor, 267 Va. 361, 593 S.E.2d 216, 219 (2004)); but see Kirksey v. Grohmann, 754 N.W.2d 825, 830 (S.D.2008) (ordering dissolution even though the business could continue despite the deadlock).
"Judicial dissolution of a limited liability company is considered a drastic remedy," the appropriateness of which "is vested in the sound discretion of the court hearing the petition." Goldstein v. Pikus, 2015 WL 4627747 (Sup Ct, NY County 2015) (quoting Matter of 1545 Ocean Ave., LLC, 72 A.D.3d 121, 131 & 133 (2d Dept 2010)) (internal quotation marks omitted).
Pursuant to Limited Liability Company Law § 702, the court may decree dissolution of an LLC "whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement." One must establish that "'the management of the entity is unable or unwilling to reasonably permit or promote the stated purpose of the entity to be realized or achieved, or [that] continuing the entity is financially unfeasible'" (Matter of Kassab v Kasab, 137 AD3d at 1137, quoting Matter of 1545 Ocean Ave., LLC, 72 AD3d 121, 131).
Pursuant to Limited Liability Company Law § 702, the court may decree dissolution of an LLC "whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement." One must establish that "'the management of the entity is unable or unwilling to reasonably permit or promote the stated purpose of the entity to be realized or achieved, or [that] continuing the entity is financially unfeasible'" (Matter of Kassab v Kasab, 137 A.D.3d at 1137, quoting Matter of 1545 Ocean Ave., LLC, 72 A.D.3d 121, 131).
The statute does not define the term "reasonably practicable." In determining whether a limited liability company should be dissolved, pursuant to Section 702, "the court must first examine the limited liability company's operating agreement to determine, in light of the circumstances presented, whether it is or is not ‘reasonably practicable’ for the limited liability company to continue to carry on its business in conformity with the operating agreement," and not whether it is impossible (seeMatter ofKassab v. Kasab , 137 AD3d 1135, [2d Dept 2016] ; Matter of 1545 Ocean Ave., LLC , 72 AD3d 121[2d Dept 2010] ). The petitioner seeking judicial dissolution must either "show that the management of the entity is unable or unwilling to reasonably permit or promote the stated purpose of the entity to be realized or achieved, or [that] continuing the entity is financially unfeasible" ( Doyle v. Icon, LLC , 103 AD3d 440, 440 [1st Dept 2013] [quotingMatter of 1545 Ocean Ave., LLC , 72 AD3d at 131 ][internal citations and quotation marks omitted]; see also Matter ofKassab v. Kasab , 137 AD3d at 1137 ).
II. DiscussionIn re 1545 Ocean Ave., LLC, 72 AD3d 121 (2d Dept 2010) (1545 Ocean), is the seminal Appellate Division case on dissolution under LLCL § 702. There, the court explained:
(Matter of 1545 Ocean Ave., LLC, 72 AD3d 121, 131 [2d Dept 2010]; see also Doyle v Icon, LLC, 103 AD3d 440, 440 [1st Dept. 2013] [quoting and applying the same standard]; Schindler v Niche Media Holdings, 1 Misc 3d 713, 716 [Sup Ct, NY County 2003] ["judicial dissolution will be ordered only where the complaining member can show that the business sought to be dissolved is unable to function as intended, or else that it is failing financially"]). Judicial dissolution of a limited liability company is considered a drastic remedy (Matterof 1545 Ocean Ave., LLC, 72 AD3d at 131).
"the petitioning member must establish, in the context of the terms of the operating agreement or articles of incorporation, that (1) the management of the entity is unable or unwilling to reasonably permit or promote the stated purpose of the entity to be realized or achieved, or (2) continuing the entity is financially unfeasible" (Matter of 1545 Ocean Ave., LLC, 72 AD3d 121, 131 [2d Dept 2010]; seealso Doyle v Icon, LLC, 103 AD3d 440, 440 [1st Dept. 2013] [quoting and applying the same standard]; Schindler v Niche Media Holdings, 1 Misc 3d 713, 716 [Sup Ct, NY County 2003] ["judicial dissolution will be ordered only where the complaining member can show that the business sought to be dissolved is unable to function as intended, or else that it is failing financially"]). Judicial dissolution of a limited liability company is considered a drastic remedy (Matter of 1545 Ocean Ave., LLC, 72 AD3d at 131).
¶ 33 For example, courts have emphasized that the test is whether it is reasonably practicable to carry on the business of the LLC, not whether it is impossible to do so. See Fisk Ventures, LLC v. Segal, No. 3017–CC, 2009 WL 73957, at *3 (Del. Ch. Jan. 13, 2009) (unpublished opinion), aff'd , 984 A.2d 124 (Del.2009) ; In re 1545 Ocean Ave., LLC, 72 A.D.3d 121, 893 N.Y.S.2d 590, 598 (N.Y.App.Div.2010). ¶ 34 Moreover, courts have recognized, as do we, that