We've recently written on a number of disputes arising out of posthumous transfers of corporate ownership interests, particularly where the transfer documents in question (often times, an estate planning device, e.g., a will or a trust instrument) butts up against transfer restrictions in the company's governing agreement (see here , here, and here, for just a few). Unless otherwise clearly provided for in the respective agreements, many of those cases result in the assignment of an economic interest only, and not the transfer of a full membership interest.
Today's post is an epilogue to one such case of what should have been the end to the knock-em-out legal brawl between the members of the wealthy Bich family over the management and control of the family business. Here, we discuss Justice Lebovits' recent decision (Bich v Bich, 2025 NY Slip Op 51202(U) [Sup Court, NY County 2025) in a battle between the rights and authority of the existing members to modify the company's operating agreement against an incoming member's voting and veto rights as a "full" member, per the terms of a settlement agreement between the parties.
The Bich Family Lawsuits.
Take a moment and go back to Peter Mahler's post from April 2023 for the history behind the fight over Grenelle LLC: Operating Agreement Trumps Postnup in High Stakes Battle Over Transfer of LLC Interest.
In short, Société Bic S.A., the French maker of the Bic pen, disposable lighters, razors and stationery, was founded at the end of WWII by family patriarch Marcel Bich. Around the time of Marcel's death in 1994, his son Bruno took over as CEO. Grenelle LLC is a Delaware limited liability company formed in 2006 by the late-Bruno and his 3 sons: Gonzalve, Charles, and Guillaume. Grenelle owns 400,000 Bic shares and a multi-million dollar Paris apartment.
When Bruno's then-wife, Veronique (mother to the Bich Brothers), sued for divorce in 2020, litigation followed as to the interpretation and effect of the transfer provisions in a postnuptial agreement providing that: "the Wife shall receive the Husband's 98.983798% interest in Grenelle, LLC."
In that action (Bich v Bich, 2023 NY Slip Op 50303[U] [Sup Ct, NY County 2023]), Justice Livote examined the definition of "interest" in the Operating Agreement and squared that definition with the usage of the word in the postnup. Ultimately, Justice Livote concluded that "the only reasonable reading of that provision is that it did not require Mr. Bich, upon the happening of an operative event, to make Ms. Bich a member of Grenelle, or to give to her his power to appoint and remove Grenelle's managing director."
In other words, the postnup only entitled Veronique to be assigned an economic interest in Grenelle, and to otherwise remain a non-member of the company without voting or managerial authority.
The Parties Settle on the Eve of Trial.
The remaining claims in that action were set for jury trial scheduled to begin on March 5, 2024.
On the eve of trial, the parties negotiated and executed in open court a Confidential Settlement Agreement and Mutual General Releases, intended to serve as a global resolution of the many active lawsuits between the family members.
Relevant to Grenelle, Veronique negotiated for her admission as a full member of the company—the very issue that had eluded her as a matter of law earlier in the case. Section 3 of Settlement Agreement specifically provided that the Bich Brothers "shall amend the current Grenelle LLC Operating Agreement to provide as follows and to execute such other supporting resolutions or notices as may be necessary" to effectuate 12 agreed-upon amendments, including:
- "VB [Veronique] is a full member with a 98.983798% ownership interest."
- Eliminating the position of Managing Director and replacing it with a board "comprised of four individuals: Veronique Bich, Gonzalve, Charles, and Guillaume Bich, and each board member will be given one vote, which vote cannot be delegated."
- All "material decisions" (defined as any decision that would result in an expense to, or modification of, Grenelle's assets in excess of 100,000 Euro) requires Veronique's vote plus the vote of 2 other board members.
The Parties Cannot Agree on the Amendment to the Grenelle Operating Agreement.
A few weeks later, in May 2024, Veronique was apparently provided a draft of the amended and restated operating agreement for her review and comment. It is unclear the extent of her comments or whether her comments were adopted. But what is clear is that sometime between May and December, discussions surrounding the amendment completely derailed.
On December 3, Veronique delivered to the Bich Brothers a 4-page proposed amendment to the operating agreement (instead of the earlier contemplated top-to-bottom amended and restated operating agreement). Veronique demanded that the Bich Brothers adopt her proposed amendment by December 15, or she would commence action seeking the enforcement of the Settlement Agreement.
On December 16, the Bich Brothers transmitted a revised version of the amended and restated operating agreement, largely keeping the provisions from the May 31 draft, but as further modified on advice of tax counsel, Delaware counsel, and French counsel.
The proposed draft acknowledged the settlement agreement and addressed in various places the agreed-upon changes contained therein. But it also made significant other changes. It created two tiers of members—"Founding Members" (the Bich Brothers) and "Member" (Veronique)—that dictated certain governance and managerial rights. It also added various provisions for the appointment of successor directors (with a separate provision for the appointment of successors to the Founding Members as opposed to a Member), added indemnification provisions, transfer restrictions (but allowing Founding Members to transfer to each other), as well as additional record-keeping and financial provisions, among other things.
A footnote to Schedule A listing the Members and their interest percentage noted: "Veronique Bich's status will be changed to a 'Member' upon her execution of this Agreement."
On December 27, 2024, Veronique rejected the proposed amended and restated operating agreement and provided a revised version of her proposed amendment, again threatening to go to Court if the Bich Brothers did not adopt her version by January 3, 2025.
The Bich Family Lawsuit, Redux: Cross-Suits for Declaratory Judgment.
On January 3, 2025, the Bich Brothers executed the Amended and Restated Operating Agreement, and simultaneously commenced an action seeking a declaration that: (i) they are not obligated under the Settlement Agreement to execute Veronique's proposed amendment; and (ii) the Grenelle Operating Agreement, as amended by the Bich Brothers on January 3, 2025, is valid and compliant with the Settlement Agreement.
Veronique asserted counterclaims for: (i) a declaration that the Bich Brothers breached the Settlement Agreement by adopting their own form of amendment and refusing to adopt hers; and (ii) a declaration that the Bich Brothers are required to rescind the Amended and Restated Operating Agreement and must adopt her form of amendment; and (iii) a claim for breach of the implied covenant of good faith and fair dealing.
Back before Justice Lebovits, the parties filed their competing motions for summary judgment.
Justice Lebovits' Decision.
On July 3, 2025, the Court issued a thoughtful and considered decision on each of the issues raised in the competing motions.
1. Are the Bich Brothers Required Under the Settlement Agreement to Adopt and Execute Veronique's Proposed Amendment?
No. Justice Lebovits held that under Section 9.4 of the Operating Agreement (the original one) [providing for no modification except in writing and signed by all members], the Bich Brothers (as members) are the only ones with the authority to amend the operating agreement. Rejecting Veronique's position that the Settlement Agreement itself was a modification to the Operating Agreement, the Court held that the Settlement Agreement expressly directs the Bich Brothers to amend the Operating Agreement to reflect the agreed-upon terms of the settlement.
2. Is the Amended and Restated Operating Agreement Valid and in Compliance with the Settlement Agreement?
No. Justice Lebovits side-stepped the validity question, and instead ruled only that the Amended and Restated Operating Agreement did not comport with the terms of the Settlement Agreement.
The Court held that the Bich Brothers' adoption of a two-tiered membership ("Founding Member" vs "Member"), along with Veronique's conditional status as member unless and until she ratifies the operating agreement as amended is inconsistent with the Settlement Agreement's plain language providing that the Bich Brothers "shall" make Veronique a "full" member of Grenelle, without any preconditions. "Full" membership means a membership complete with voting and veto rights.
The parties, taking competing views on whether the Bich Brothers were permitted to make additional amendments outside of Section 3, briefed, at length, the legal concept of expressio unius est exclusion alterius (express mention of one thing excludes all others). In other words, was the list enumerated in the Settlement Agreement an exclusive list of the contemplated amendments.
The Court held that "the only interpretation that honors § 3 of the settlement agreement and preserves Ms. Bich's veto is one that confines the Bich Brothers to the 12 amendments on which the parties agreed."
The Court concluded that the Amended and Restated Operating Agreement, therefore, does not comply with the Settlement Agreement and the Bich Brothers are in breach of the settlement until they rescind the amended operating agreement.
3. Did the Bich Brothers Breach the Implied Covenant of Good Faith and Fair Dealing?
Maybe. "The Bich Brothers conditioned her membership and managerial rights on her acceptance of an amended operating agreement that falls short of the terms in the settlement agreement. By creating this condition, the Bich Brothers deprived Ms. Bich of her bargained-for benefits."
That said, Justice Lebovits dismissed the implied covenant claim as duplicative of Veronique's breach of contract claim.
4. Is Specific Performance Directing the Execution of Veronique's Proposed Amendment Warranted?
No. Notwithstanding the Bich Brothers' argument that the Amended and Restated Operating Agreement was "superior" to Veronique's proposed amendment because it contained other necessary modifications including tax and regulatory requirements, the Court interpreted the Settlement Agreement as contemplating changes made only to the "current" operating agreement.
But, as earlier discussed, ordering the Bich Brothers to sign Veronique's proposed amendment would be contrary to terms of the Operating Agreement. Thus, the Court granted summary judgment declaring that Veronique's proposed amendment comports with the terms of the Settlement Agreement, but also granted summary judgment declaring that "the Bich Brothers are not required to execute Ms. Bich's proposed amendment—but the court nonetheless encourages them to do so."
While the Court made clear its preferred version of amendment (it's Veronique's), Justice Lebovits left it to the Bich Brothers to take action in line with the Court's declarations that:
- The Bich Brothers' amendment to the Grenelle LLC operating agreement does not comply with the parties' settlement agreement;
- The Bich Brothers are in breach of the settlement agreement unless and until they rescind their amendment to the Grenelle LLC operating agreement;
- Ms. Bich's proposed amendment to the Grenelle LLC operating agreement is consistent with the parties' settlement agreement;
- The Bich Brothers are not required to execute Ms. Bich's proposed amendment to the operating agreement in particular; but they will be in breach of the settlement agreement unless and until they adopt an amendment to the operating agreement that is consistent with the settlement, as it is interpreted in this decision.
Final Thoughts
As with his earlier decision navigating between the terms of the postnup and the operating agreement, Justice Lebovits deftly navigated between the terms of the settlement agreement and the operating agreement.
My guess is that part of the reason pre-litigation frustrations bubbled over into legal action was due to the lengthy negotiation period since the March 2024 execution of the settlement agreement. The settlement did not dictate a date by which the amendments were to be implemented. No doubt Veronique felt that the Bich Brothers were slow-rolling the implementation, while the Bich Brothers felt that they were merely doing their due diligence.
Unfortunately, that means that Justice Lebovits decision also does not have a time by which the Bich Brothers are required to cure their breach of the settlement by rescinding the Amended and Restated Operating Agreement and executing an amendment that more strictly comports with the terms of the settlement.
So, is more litigation in the parties' future? I hope not, but what's another lawsuit among family.
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