It is a settled principle of Delaware corporate law that creditors of an insolvent corporation have standing to pursue a derivative action on behalf of the corporation against the directors for breaches of fiduciary duties. Many commentators and two Delaware cases have assumed that this right also existed for creditors of Delaware limited liability companies. In CML V, LLC v. John Bax et al. (Del. Ch. Ct. November 3, 2010), however, the Delaware Chancery Court held that the Delaware Limited Liability Company Act (“Delaware LLC Act”) does not grant standing to creditors to bring a derivative claim against directors on behalf of the limited liability company (“LLC”). The Court found that the language of Section 18-1002 of the Delaware LLC Act unambiguously limited standing to bring a derivative claim to holders of membership interests in an LLC and their assignees. It rejected arguments by a creditor that the same considerations present in corporate law should permit similar claims on behalf of an insolvent LLC.

Section 79-29-1101 of Mississippi’s current Limited Liability Company Act (“Mississippi LLC Act”) , which applies to existing Mississippi LLCs until December 31, 2011, outlines the procedure required for a member to maintain a derivative action. Unlike the Delaware LLC Act, though, this provision never expressly states that “a plaintiff must be a member.” It merely states that a member may bring such an action if certain conditions are met. In the language of the CML V case, the Delaware statutory provision is exclusive, but the Mississippi LLC Act provision—like the Delaware General Corporation Law provision discussed in CML V—is non-exclusive. Interestingly, Section 79-29- 1101 tracks the language of the Mississippi Business Corporation Act found in Section 79-4-7.41 very closely, and all of Article 11 of the Mississippi LLC Act appears to have been modeled on its counterpart in the Mississippi Business Corporation Act. While no case law exists interpreting whether a creditor of a Mississippi LLC may bring a derivative action, a creditor has an argument that the non-exclusive language of the statute, along with its similarity to the corporate statutes, gives the creditor of an insolvent limited liability company the right to maintain a derivative action.