8908 Kanis Remainco LLC v. Gastroenterology and Surgery Center of Arkansas, P.A.

── 8908 Kanis Remainco LLC v. Gastroenterology and Surgery Center of Arkansas, P.A. ── Court: Court of Chancery of Delaware Date: April 15, 2026 Category: General IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE 8908 KANIS REMAINCO LLC ) ) Plaintiff, ) ) v. ) C.A. No. 2025-0901-KSJM ) GASTROENTEROLOGY AND ) SURGERY CENTER OF ARKANSAS, ) P.A. and ALONZO WILLIAMS, ) ) Defendants, ) ) and ) ) GASTROENTEROLOGY AND ) SURGERY CENTER OF ARKANSAS ) II, LLC, ) ) Nominal Defendant. ) POST-TRIAL MEMORANDUM OPINION Date Submitted: February 25, 2026 Date Decided: April 15, 2026 Stephen C. Norman, Samuel G. Gustafson, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; Counsel for Plaintiff 8908 Kanis RemainCo LLC. David G. Holmes, CROSS & SIMON, LLC, Wilmington, Delaware; Jess Askew III, KUTAK ROCK LLP, Little Rock, Arkansas; Counsel for Defendants Gastroenterology and Surgery Center of Arkansas, P.A. and Alonzo Williams. McCORMICK, C.  The nominal defendant’s LLC agreement establishes eligibility criteria for membership and management. The plaintiff filed suit seeking declaratory judgments that the entity defendant does not meet the criteria to be a member and the individual defendant does not meet the criteria to be a manager. The defendants concede that they do not meet the eligibility criteria. But they interpret the LLC agreement to provide a single mechanism for divesting a member of its interests—an option to buy out the entity defendant upon its loss of eligibility. They argue that the option is waivable. They say that the plaintiff waived it here. And as a result, both defendants are able to maintain their posts. The defendants also raise a host of affirmative defenses, arguing that the plaintiff’s own actions in managing the nominal defendant bar its claims for relief. This post-trial decision finds that the defendants’ failure to meet eligibility requirements means that defendants lost their member status and managerial rights. The entity defendant, however, maintains its economic interests in the nominal defendant. Judgment is entered for the plaintiff. I. FACTUAL BACKGROUND The court held trial on a paper record on February 11, 2026. The record comprises 65 trial exhibits. These are the facts as the court finds them after trial.1 1 This decision cites to: C.A. No. 2025-0901-KSJM docket entries (by docket “Dkt.” number); trial exhibits (by “JX-” number); the trial transcript, Dkt. 45 (“Trial Tr.”); and stipulated facts set forth in the Joint Pre-Trial Stipulation and Order, Dkt. 40 (“PTO”). The parties called the following witnesses by deposition: Mark Roberts (8908 Kanis RemainCo Chief Restructuring Officer) and Alonzo Williams (GSC Owner and Former Surgery Center Medical Director). The transcripts of the witnesses’ respective depositions are cited using the witnesses’ last names and “Dep. Tr.”  A. Williams Forms The Surgery Center. Defendant Alonzo Williams is a gastroenterologist based in Arkansas.2 On March 1, 2009, Williams formed Gastroenterology and Surgery Center of Arkansas II, LLC (the “Surgery Center” or the “Company”) for the purpose of “own[ing] and operat[ing] an ambulatory surgery center in the Little Rock, Arkansas area, providing gastrointestinal procedures and other related medical services to outpatients[.]”3 Williams contributed “substantially all of the assets” of his pre- existing surgical center to the Company at the time of formation.4 T