to lose Delaware LLC formations

The Delaware Court of Chancery on June 11 issued a consent judgement forcing four limited liability companies to relinquish their Delaware certificates of formation.

Backpage, which pleaded guilty to crimes related to promoting human trafficking, has ceased operations and forfeited its assets to the U.S. government.

The judgment means, LLC, Website Technologies, LLC, Posting Solutions, LLC, and Amstel River Holdings, LLC will have their certificates of formation cancelled 31 days after the current federal criminal charges against the company are resolved.

“Delaware law now allows for the Attorney General’s office to petition for the cancellation of a company’s formation due to ‘abuse or misuse of its limited liability company powers, privileges or existence,’” said Attorney General Kathy Jennings. “In this first use of that power with regard to LLCs, DOJ and the Court have set a precedent for using that power to address a company whose formation was largely used to promote criminal activity.”

The Delaware Department of Justice’s November 2018 complaint was filed under then-Attorney General Matt Denn. It asked for the cancellation and alleged the four entities “were deeply involved in the criminal activities that were part and parcel of the ownership and operation of the notorious sex trafficking website Backpage” and cited numerous criminal guilty pleas by the entities themselves and one of the principals involved in the entities.

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