Legal Question in Business Law in California

Re: What is B stock in a L.L.C. ?

Your question does not make a lot fo sense and you will need to consult with a local attorney who can review the LLC documents to determine what rights you actually have. LLCs issue membership, not shares of stock. When you bought your interest in the LLC, you most likely signed a contract or an operating agreement that specified the rights of the members, including what happens upon dissolution. An attorney cannot interpret a document that he or she has not read, so it is impossible to answer your question in this forum without more information.

Re: What is B stock in a L.L.C. ?

Actually, LLCs can, but usually don't, issue stock. Further, in the rare cases where they do issue stock, they don't ordinarily issue different series of stock, such as "common" and "preferred," or Series A, Series B, etc., but again there is no law or management principle that forbids it.

So, what you have is a security in a very unusually-organized LLC, probably put together by people who are very financially sophisticated, very crafty, or both.

Since LLCs are very free-form both as to financial structure and management, one cannot even guess what rights Class B holders might have during normal operations, or in liquidation.

When you invested in this stock, you should have received detailed disclosures. If you didn't, there is a whiff of fraud in the air. The LLC's management is obligated to give you full information, both as to the rights of holders of Series B stock to vote and to receive dividends (or liquidating distributions), and as to the general affairs of the company.

If the information isn't free-flowing, or you didn't receive disclosures when you bought in, look for a securities lawyer.

So, I guess class b stock is whatever the LLC's organizational documents say it is.