Practice Areas

New Jersey Doesn’t Require LLCs To Have an Operating Agreement, But You Should Have One Anyway. Here’s Why.

Ansell Grimm June 7, 2023

Most people aren’t thinking about divorce on their wedding day. Similarly, when members of a limited liability company (LLC) optimistically join together on their new venture, a bitter dispute or parting of the ways with the folks they’ve gone into business with is probably not top of mind.

While the law doesn’t require that a couple enter into a written pre-nuptial agreement for their marriage to be valid and legal, many do so anyway to bring clarity and certainty in the event of a conflict, define their respective rights and obligations, and hopefully spare themselves lengthy, costly, and destructive litigation down the road. The same principles apply to New Jersey LLCs.

New Jersey law does not require limited liability companies to have written operating agreements. This is the case in many other states as well, including Delaware. But just because a written LLC operating agreement isn’t mandated by law in order to establish and maintain an LLC doesn’t mean that starting and managing an LLC without one is a good idea. In fact, failure to document and define the relationship between the members of an LLC can be costly for all involved.

What Is An LLC Operating Agreement?

While state LLC laws may establish the rights and obligations of the entity and its members to third parties and taxing authorities, an LLC operating agreement is the controlling agreement that sets forth the relationship between the members and each other and between the members and the LLC itself. Among other things, the operating agreement defines such core issues as ownership transfer, voting rights, business activities, management structure, management authority, and dispute resolution mechanisms. All of these areas are ripe for misunderstanding and divergent viewpoints unless clearly and definitively set forth in an agreement between all members.

Here are three reasons you should prepare an operating agreement for your New Jersey LLC, even though you don’t have to.

1. Clarifying Ownership and Management Responsibilities

A written LLC operating agreement is a foundational document that outlines the ownership structure and management responsibilities within the business. It clearly defines each member’s rights and obligations, including their ownership percentage, voting power, and profit distribution. This helps prevent conflicts and misunderstandings among members by establishing a framework for decision-making and governance. Additionally, the operating agreement can specify the roles and responsibilities of managers and non-managing members, providing clarity and promoting effective management of the LLC.

2. Protecting Members From Personal Liability

One of the key advantages of an LLC is in the name itself: limited liability. A properly structured and managed LLC protects members and members from personal liability for debts and liabilities incurred by the entity. But that protection is not unlimited and can be easily lost if the members and managers fail to maintain and treat the LLC as a separate entity or follow the corporate formalities required by law. By having a comprehensive written operating agreement, an LLC can better ensure that the members treat the business like a business rather than as a sole proprietorship with a fancy name. The operating agreement can also include provisions that ensure compliance with legal and regulatory requirements, reducing the risk of personal liability for the actions or debts of the company.

3. Resolving Deadlocks and Disputes

Business owners aren’t always going to see eye-to-eye. Sometimes, disagreements between LLC managers and members devolve into stalemates or conflicts that can threaten the relationships of the owners and the continued viability of the business. A well-drafted operating agreement recognizes the possibility, if not probability, of such disputes and deadlocks and includes mechanisms for resolving them that can spare the parties and the LLC from the costs and disruption of protracted litigation. Additionally, the operating agreement can include provisions for the voluntary or involuntary dissolution of the LLC, outlining the steps to be followed and the distribution of assets in such an event.

If you have questions about LLC operating agreements or would like assistance preparing one for your business, please contact one of the corporate law attorneys at Ansell, Grimm & Aaron.

Ansell Grimm & Aaron Client Secures Cannabis Licenses

Ansell Grimm June 6, 2023

Ansell Grimm & Aaron is pleased to congratulate its latest client on securing a cannabis license from the New Jersey Cannabis Regulatory Commission. Mule Extracts LLC was awarded an Annual Class One Cultivator License.

Our Controlled Substances and Regulatory Practice attorneys understand the complex laws related to the production, sale, use, regulation, and legalization of controlled substances, including hemp, cannabis, and psychedelics. A multifaceted area of the law with conflicting regulations from different governing bodies, we help our clients navigate all aspects of this emerging field. Contact one of our attorneys if you have questions about this evolving area of law.

Ansell Grimm & Aaron Grows Litigation Department With Two New Attorneys

Ansell Grimm June 1, 2023

Ansell Grimm & Aaron, PC is pleased to announce that Gabriel Blum and Anthony Sango have joined the firm as associate attorneys. Blum and Sango join the firm’s Woodland Park office.

“We’re thrilled to have Gabriel and Anthony on board,” said Managing Partner Michael V. Benedetto. “Adding two skilled litigators allows us to meet our clients’ steadily increasing legal needs. Their presence also supports our strategic growth plan, notably enhancing our capabilities.”

Blum’s practice encompasses a range of complex civil litigation matters. Licensed in New Jersey and New York, he is an experienced litigator joining from a national litigation firm. Blum earned his law degree at Benjamin N. Cardozo School of Law, where he was an articles editor for the Cardozo Journal of Law & Gender. He graduated from Yeshiva University with a Bachelor of Arts.

Sango handles a range of business and civil litigation matters. Before joining Ansell Grimm & Aaron, he was an attorney at an AmLaw 200 firm dedicated to civil defense litigation. Sango graduated from Seton Hall University School of Law and earned his undergraduate degree at SUNY Stony Brook.

About Ansell Grimm & Aaron, PC

Ansell Grimm & Aaron, PC was founded in 1929 and has a long history of delivering for clients who come to us to resolve critical legal matters that are often urgent and stressful. A general practice law firm, Ansell Grimm & Aaron is powered by experienced attorneys who understand that the best outcome is one that serves the client’s needs.

Rock-Scissors-Paper Won’t Cut It: Effective Mechanisms for Resolving Deadlocks Between Business Owners

Ansell Grimm May 31, 2023

By Lawrence H. Shapiro

In sports, no one likes games to end in a tie. They are anti-climactic and disappointing. But in business, ties can have much more significant consequences. When equal shareholders in a closely held corporation, partners in a partnership, or members of a limited liability company find themselves tied – deadlocked – when making significant business decisions, it can put both the ongoing viability of the enterprise and the relationships behind the business in existential peril. And in any company where voting power or equity interests are equally divided, deadlock is always possible, if not a probability.

Management and ownership deadlocks can quickly devolve from disagreements among friends to irreconcilable differences between two soon-to-be-former business partners. Often, such disputes wind up in a courtroom where the fate of the owners and the business they bult together is left in the hands of a judge. Sometimes, litigation is necessary to protect the rights of an owner or preserve the business and its assets. In such circumstances, it is imperative that each owner retain their own experienced business litigation attorney to advise them and work to obtain a favorable outcome that, ideally, protects the business and the owner’s interests.

But litigation between deadlocked business owners can also be costly, disruptive, and lead to results that neither side wants, such as judicial dissolution and liquidation of the business. Given the foreseeability of deadlock – and the probable negative consequences of an extended stalemate among owners – it is critical that business owners have an effective mechanism in place to resolve these disputes when they arise.

For this reason, deadlock provisions should be included in a business’s foundational documents, such as an operating agreement, partnership agreement, or corporate bylaws. Even if the original versions of such documents do not contain deadlock provisions, amendments can be crafted to address a logjam should it arise. Resolving deadlocks that threaten the future of a business should not be left up to dumb luck. In fact, coming to an agreement on how to resolve a disagreement is easier while the business owners are getting along than having a court decide after the relationship falls apart.

If you have questions about ownership deadlocks or would like assistance establishing a deadlock resolution for your business, please contact one of the business law attorneys at Ansell, Grimm & Aaron.

Ansell.Law Secures Micro-license and Zoning Site Approval for Cannabis Retailer in Monmouth County

Ansell Grimm May 19, 2023

Establishing a retail cannabis facility in New Jersey is a long and complicated process. Although adult recreational cannabis use is now legal in New Jersey, local municipalities have their own regulations limiting or prohibiting recreational-use retailers. Before opening a retail location, recreational cannabis retailers must first successfully navigate through a complex and rigorous licensing process with the State of New Jersey.

After obtaining a license from the state, retailers are then faced with the arduous task of working through the maze of local regulations and zoning rules to secure approvals for a suitable location for their store.

The firm’s Controlled Substances and Regulatory Practice Group, led by attorneys Joshua S. Bauchner and Kelsey M. Barber, secured a “Micro” license for its client, Canopy Crossroad, which classification requires, among other things, that ownership of the cannabis retailer consists of local residents. After clearing that first hurdle, Canopy Crossroad needed to find and secure a location for its store and then undertake the challenging local municipal zoning approval process. They decided on Red Bank, a town that had agreed to opt-in to New Jersey’s law allowing the sale of cannabis. But before opening their dispensary, Canopy Crossroad needed approval from the Borough’s Planning Board.

As a full-service firm with cross-disciplinary practice areas, our client then was able to work with Rick Brodsky, of the Land Use and Zoning Law Department, who appeared before the Red Bank planning board on Monday, May 1^st, and Monday, May 16^th, for hearings on Canopy Crossroad’s application for site plan approval to open their retail outlet. After a heated debate among Brodsky, representatives of Canopy Crossroad, the Red Bank Planning Board, and opponents to opening a cannabis retailer in Red Bank, the Planning Board approved Canopy Crossroad’s conditional use site plan application on an 8-1 Board vote.

“Red Bank opted in, and cannabis is legal in the state,” said Brodsky. “By opting in, the town was required to specify districts where cannabis can be sold as a permitted use. The Red Bank Planning Board correctly interpreted the law, and we are delighted that they approved our site plan.”

Bauchner further noted that the Firm was a “one stop shop” for cannabis, and other clients, servicing all our clients’ needs: “From corporate formation and operating documents, to lease agreements or site acquisition, to preparation of applications before the State CRC and Townships, to zoning approvals, all the way through to vendor and employee agreements once operational, our attorneys collaborate across disciplines to fulfill all client needs.”

Roy Hibberd Sets Up Innovative Fitness Center Founder for Franchising Success

Ansell Grimm May 12, 2023

Ask personal trainer and fitness center owner Anthony Kapasakis to develop a training and fitness program for you, and he will enthusiastically put together an intense and personally tailored plan perfectly suited to your experience and goals. But if you’d asked Anthony in 2021 for his plan to grow and expand his group of four innovative and increasingly popular New Jersey fitness centers, he would have been far less pumped.

“I had a general idea of what I wanted in terms of growth – empowering my managers to ultimately take over and own their locations, building strong ties with the communities we operated in, developing a strong brand, and keeping a consistent company culture and member experience,” said Anthony, founder and owner of SETS Hybrid Training. “But I didn’t have any real sense of how to accomplish those things. That all changed when I met Roy.”

Both as a lawyer, a corporate executive, and a franchise area development owner himself, Ansell Grimm & Aaron’s Roy Hibberd has played instrumental roles in the success of countless businesses in a wide range of industries, developing franchising and other strategic growth plans for billion-dollar companies and start-ups alike. He fondly remembers his first meeting with Anthony and how impressed he was with Anthony’s vision and passion for his work, his fitness centers, his employees, and his members.

A “Graduate Degree Program in Franchising”

“Anthony clearly knew the fitness business inside and out, but it was his infectious enthusiasm and genuine interest in seeing his managers and employees grow and succeed as much as his business that made me excited to work with him,” Roy said.

Anthony, who at the time owned and operated SETS gyms in Freehold, Hamilton, Jackson, and Old Bridge, New Jersey, had a very high-level understanding of franchising but was seeking to work with an attorney who could address both the business and legal issues involved. After discussing his goals with Roy, Anthony was convinced that franchising was the best way to realize his dreams for his business and that Roy was the right person to make that happen given Roy’s significant franchise expertise and experience.

“I knew next to nothing about franchising,” Anthony recalls. “Roy understood that while I was an entrepreneur, I certainly wasn’t a lawyer, and he didn’t talk to me like one. He walked me through every aspect of how things would work, what to expect, and what we needed to do and change to create a SETS franchise system. Then we got to work.”

A Better Business Owner and Stronger Company

Anthony remembers that the process of getting his company in position for expansion, in particular the development of the SETS Franchise Disclosure Document (FDD), transformed and improved the way he saw and ran his business. Working with Roy in formalizing policies and procedures, building out a business and growth plan, defining KPIs and revenue targets, and all the other elements needed for the FDD and SETS franchise system made SETS more efficient and agile and helped Anthony transform his conceptual goals into concrete, achievable plans.

“Even if we never launched our franchising plans, just the exercise of putting them together and working closely with Roy throughout the process made me a better business owner and made SETS a stronger company,” Anthony said.

Of course, those franchising plans came to fruition. In January 2023, SETS’ Old Bridge location became its first franchise, with its long-time manager becoming its first franchisee. The second franchised location in Barnegat, New Jersey, came online in March 2023. SETS is now expanding beyond the Garden State, with a new franchise soon to open in Murfreesboro, Tennessee, and plans for a location in South Carolina.

Anthony says that Roy’s business advice and legal counsel was invaluable to SETS’ success and that working with him was both enlightening and enjoyable.

“I knew I could call Roy anytime with a question or concern, and he would have my back. I continue to look to him for advice and feel like I have a true partner on this journey,” Anthony said.

Joshua S. Bauchner Named a NJ Cannabis Insider 2023 Award Finalist

Ansell Grimm May 1, 2023

Ansell Grimm & Aaron is pleased to announce that Joshua S. Bauchner is a finalist for the NJ Cannabis Insider 2023 Awards! He has been nominated in the Excellence in Cannabis Law: Employment Lawyer category.

Voting is now open and can be done once per day through May 8, 2023. Please join us in supporting Josh by submitting as many votes as possible for him. Click here to cast your vote.

As head of the Controlled Substances and Regulatory Law Practice Group, Josh co-hosted on behalf of the Firm the first-ever Cannabis Symposium in New Jersey which drew nearly a thousand people (two other Symposia followed). He is co-chair of the New Jersey State Bar Association Cannabis Law Committee, a member of the NORML Legal Committee and Amicus Committee, has spoken at the Cannabis World Congress and Business Expo at the Jacob Javits Center, and has presented CLE’s on cannabis at the NY and NJ State Bar Associations, among other fora across the country. He also was honored with the New Jersey Law Journal’s Innovator of the Year Award for his work in the cannabis space and also publishes regularly on the topic.

The attorneys in the group understand the complex laws related to the production, sale, use, regulation, and legalization of controlled substances, including hemp, cannabis, and psychedelics. A multifaceted area of the law with conflicting regulations from different governing bodies, we help our clients navigate all aspects of this emerging field.

Rick Brodsky Represents Seller in $8.4M Monmouth County Parks System Acquisition

Ansell Grimm April 21, 2023

The Monmouth County Parks System just got a beautiful new view of the Navesink River, thanks to the help of Ansell Grimm & Aaron’s Rick Brodsky.

Stretched along the bank of the Navesink River is a largely undeveloped 17-acre waterfront estate, save for the existing residence and a pier extending into the river. The property has been privately owned for years, but the owners considered selling the prime land should the right buyer come along. While compensation for their property was important, the planned future use of the property when sold was equally crucial to the owners. They wanted to ensure the property’s legacy by maintaining its natural state while opening it for the public to enjoy. The owners turned to Rick Brodsky to help make their dreams come true.

Brodsky, who practices commercial and residential real estate law, began working with the owners several years ago to find a buyer to meet all their goals. As luck would have it, the county of Monmouth approached the sellers to begin discussing its possible purchase of the land. Rick started working closely with the owners, Monmouth County, and the Monmouth Conservation Foundation to ensure a smooth and beneficial transaction for all parties.

“This was a complex deal that has been years in the making,” Brodsky said. “But in the end, we reached an agreement that satisfied all parties involved.”

The 17-acre waterfront estate is on the Navesink River in Locust, New Jersey. The property is adjacent to Historic Hartland Place and will connect to Hartshorne Woods, an 800-acre peninsula park, giving park visitors access to the river. Under the terms of the sales agreement, the land use will be restricted to park use and be open to the public.

“I am proud to be able to play a role in the creation of this new park,” Brodsky said. “I am always hesitant to say a deal is a win-win, but in this case, I think it truly is. It’s great for the sellers, the county parks, and the public.”

BANKRUPTCY DEPARTMENT UPDATE – FEBRUARY 2023

Ansell Grimm February 1, 2023

Led by Department Chair James G. Aaron, in coordination with partners Joshua S. Bauchner and Anthony J. D’Artiglio, Ansell’s attorneys are well versed in the intricacies of bankruptcy practice. Our bankruptcy attorneys are here to offer the knowledge and advice about the benefits and detriments of the different types of bankruptcy; Chapter 11, Chapter 13, and Chapter 7 proceedings, all of which should be considered prior to any individual or business filing for bankruptcy. Before filing, our attorneys will provide a complete analysis of our client’s assets and guide them through the establishment of an asset protection plan.

The Firm represents numerous national and state banking institutions, Fortune 500 companies, and many local corporate entities in restructuring corporate debt, and represents both creditors and debtors in all proceedings.

In particular, the Firm represents commercial landlords whose tenants file for bankruptcy. The landlord becomes an estate creditor and has numerous, defined rights under the U.S. Bankruptcy Code. As set forth below, Ansell recently experienced significant success on behalf of our landlord/creditor clients protecting their interest in realty and securing against abuse of the bankruptcy process by recalcitrant debtors.

The firm also handles state court insolvency matters, an alternative to federal bankruptcy, known as an assignment for the benefit of creditors (“ABC”). Similar to a Chapter 7 liquidation proceeding, an ABC permits a debtor to assign its claims to an assignee — here, an attorney with the Firm appointed by the Court — to pursue preferential and fraudulent claims under state law.

By example, here are some of the Firm’s recent successes in this practice area:

Recovery for Landlord in Debtor’s Attempt to Escape Obligations

Partner Anthony J. D’Artiglio and Shareholder and department co-chair Joshua S. Bauchner recently secured a favorable decision from the Bankruptcy Court in the Southern District of New York in the Fairway Group Holdings Corp. matter. Our client, Debtor’s property owner, filed a multi-million-dollar cure objection asserting that Debtor had failed to repair and maintain the property in accord with its lease obligations, and thus needed to make the necessary repairs or pay for the repairs as part of the lease assumption and assignment. Debtor sought to dismiss the cure objection, arguing that the new tenant was responsible for all pre-assignment defects as part of the lease’s ongoing repair and maintenance obligations and that, because property owner did not issue a default notice pre-petition pursuant to a lease provision, property owner could not claim that a “default” existed requiring cure pursuant to the Bankruptcy Code. The Court resoundingly rejected Debtor’s arguments, holding that (i) Debtor is responsible for all necessary pre-assignment repairs pursuant to the lease because the buyer took the property “free and clear” of any and all defaults by Debtor at the time of the assignment, and (ii) landlord was not required to formally notice a “default” under the lease to seek the cost of repairs from Debtor for any pre-assignment condition in need of repair particular where, as here, Debtor was on notice upon the filing of the cure objection. As a result of this favorable ruling, our client can recover millions of dollars in repair costs.

Conversion to a Chapter 7 and Vacature of Extension of Automatic Stay

The Firm successfully compelled conversion of a meritless Chapter 11 to a Chapter 7 proceeding and convinced the Court to vacate an extension of the automatic stay to the principal’s of the Debtor company. Debtor filed a Chapter 11 petition in the District of New Jersey just before it and its principals were scheduled to face trial in the Western District of Missouri on multi-million dollar fraudulent scheme related to the sale of a business. Led by Joshua S Bauchner and Anthony J. D’Artiglio, the firm successfully convinced the Court to vacate an extension of the automatic stay to the principals of Debtor who sought to utilize the Bankruptcy to shield themselves from liability. Furthermore, we vigorously opposed confirmation of a meritless Plan of Reorganization, culminating in Debtor voluntarily converting its Chapter 11 reorganization to a Chapter 7 liquidation requiring the appointment of a Trustee to pursue our client’s and other creditors’ interests. As a result, the adversary complaint and related Bankruptcy matters were dismissed in New Jersey permitting the action to proceed to trial in Missouri.

Protection for Landlord from Tenant Bankruptcy

Partner Anthony J. D’Artiglio and Shareholder Joshua S. Bauchner secured an extremely favorable settlement on behalf of a property owner whose tenant filed for bankruptcy after failing to make any rent payments over a prolonged period. Following our filing of an application to compel lease rejection or for relief from the automatic stay, the tenant agreed to pay outstanding rent and additional rent, our client’s attorneys’ fees and costs, and to increase the security deposit as a condition of assumption of the lease, ensuring the property owner was not harmed by the tenant’s bankruptcy filing.

Relief for Landlord from Automatic Bankruptcy Stay

Partner Anthony J. D’Artiglio and Shareholder Joshua S. Bauchner successfully secured relief from the automatic bankruptcy stay for a landlord whose tenant had sublet the property without authorization, failed to pay substantial rent, and additional rent due and owing. We successfully convinced the Court to order the tenant to make post-petition payments on an ongoing basis and to lift the automatic stay to permit the property owner to pursue the tenant for damages and eviction in State Court while the bankruptcy remained pending.

For additional information concerning Ansell’s Bankruptcy Department, please contact us at (973) 247-9000, or email James G. Aaron ([email protected]), Joshua S. Bauchner ([email protected]), or Anthony J. D’Artiglio ([email protected]).

About Ansell Grimm & Aaron, PC
Ansell Grimm & Aaron, PC was founded in 1929 and has a long history of delivering for clients who come to us to resolve legal matters that are often urgent, stressful, and of great importance. A general practice law firm, Ansell Grimm & Aaron is powered by experienced attorneys who understand that the best outcome is the one that serves the needs of each client.

The above is for informational purposes only and does not constitute legal advice. Transmission of the materials and information contained herein is not intended to create, and receipt thereof does not constitute the formation of, an attorney-client relationship. Attorney advertising.

CONTROLLED SUBSTANCES & REGULATORY LAW UPDATE – JANUARY 2022

Ansell Grimm January 6, 2023

New York Lawmakers Introduce Psychedelics Legalization Bill

New York state lawmakers introduced a bill to legalize natural psychedelics including psilocybin. A.B. 114, originally intended to be introduced in the 2023-2024 legislative session, was proposed last week by Democratic Assembly members Linda Rosenthal, Jo Anne Simon, and Karines Reyes, according to a report from Marijuana Moment.

If passed, the bill would amend New York state law to legalize the “possession, use, cultivation, production, creation, analysis, gifting, exchange, or sharing by or between natural persons of twenty-one years of age or older of a natural plant or fungus-based hallucinogen.” Included in the “plant or fungus based hallucinogens,” covered by the bill are DMT, mescaline, psilocybin and psilocin.

In recognition of the rapidly evolving perception of plant and fungus-based hallucinogens, the proposed bill also seeks to remove these drugs from Schedule 1 of New York’s list of controlled substances, offers legal protections to individuals who lawfully use natural psychedelics, and prohibits state and local law enforcement agencies from cooperating with U.S. agencies which criminalize natural psychedelic drugs.

New Jersey’s Psilocybin Behavioral Health Access and Services Act Seeks Legalization and Home Growth of Psilocybin

New Jersey Assembly Bill 4911, introduced to the Senate and Assembly, would decriminalize psilocybin, authorize personal use, and expungements for certain offenses involving psilocybin production, possession and distribution.

Titled the “Psilocybin Behavioral Health Access and Services Act,” the legislation would legalize the possession and distribution of up to 4 grams of psilocybin for adults 21 and over, and allow adults to cultivate mushrooms capable of producing psilocybin for personal use.

The proposed law also would create the Department of Health Psilocybin Behavioral Health Access and Services Advisory Board to oversee the process, a legal and regulatory structure to establish psilocybin service centers for treating patients, and for the commercial production of psilocybin.

Ansell’s Psychedelics Practice

On the heels of its successful cannabis practice, which has included numerous granted licenses for its clients as well as successes in Court litigating cannabis matters, last year the Firm expanded into the realm of psychedelics.

The Firm has an established record in the cannabis space enabling us to serve our clients unlike any other area law firm. By example, we co-hosted the first-ever Cannabis Symposium in New Jersey which drew nearly a thousand people (two other Symposia followed). Joshua S. Bauchner, head of the practice group, is co-chair of the New Jersey State Bar Association Cannabis Law Committee, has spoken at the Cannabis World Congress and Business Expo at the Jacob Javits Center, and has presented CLE’s on cannabis at the NY and NJ State Bar Associations, and at the NORML Legal Conference in Aspen, among other fora across the country. He also recently was honored by the New Jersey Law Journal as one of its “2022 Innovators of the Year” for his work in the controlled substances space.

The Firm also was honored by the New Jersey Cannabis Insider as one of three finalists for Excellence in Cannabis Law and has been covered by numerous media outlets and published widely on the topic.

Please contact Joshua Bauchner ([email protected]) or Kelsey Barber ([email protected]) or call (973) 247-9000 if you are interested in exploring opportunities in the legalized psychedelics arena.