MDLY Medley Management Inc

Item 8.01. Other Events.

In connection with possible strategic alternatives including restructuring transactions and/or similar transactions involving Medley LLC, including as previously disclosed and as described in Item 5.02 of this Current Report on Form 8-K, and after consultation with the Company’s and Medley LLC’s tax advisors, the Company and Medley LLC determined that it would be advisable and potentially advantageous that Medley LLC elect to be treated as a corporation for tax purposes. On February 3, 2021, Medley LLC filed with the U.S. Internal Revenue Service Form 8832 electing to classify Medley LLC as a corporation for U.S. federal income tax purposes, effective as of January 24, 2021 (the “C-Corp Election”). Prior to the C-Corp Election, Medley LLC had been treated as a partnership for income tax purposes and therefore had not previously been subject to U.S. federal, state or local income taxes since all income, gains and losses were passed through to Medley LLC’s members (other than a portion of taxable income from Medley LLC and its subsidiaries subject to New York City’s unincorporated business tax). As a result of the C-Corp Election, Medley LLC will be treated as a corporation for U.S. federal income tax purposes, and will be subject to U.S. federal income tax on any taxable income at the corporate tax rate, which is currently a maximum of 21%, and would likely pay state and local income tax at varying rates. Following the implementation of the Unit Exchange disclosed in Medley LLC’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2021, the members of Medley LLC are Medley Management Inc. (holding approximately 98% of the Medley LLC Units) and Freedom 2021 LLC, an entity owned and controlled by Seth Taube (holding approximately 2% of the Medley LLC Units).

On February 3, 2021, Medley LLC and the Company (as Medley LLC’s managing member) executed and adopted a First Amendment (the “Amendment”) to the Fourth Amended and Restated Limited Liability Company Agreement of Medley LLC, dated as of September 23, 2014 (the “Medley LLC Operating Agreement”), for the purpose of expressly permitting the implementation of the C-Corp Election. The Amendment amends the Medley LLC Operating Agreement to provide that the Members of Medley LLC intend to treat Medley LLC as a corporation for income tax purposes, and that Medley LLC shall file as a corporation for income tax purposes, except where otherwise required by applicable law. The Amendment authorizes Medley LLC and the Company (as Medley LLC’s managing member) to implement and effectuate such further appropriate conforming amendments to the Medley LLC Operating Agreement as may be necessary or desirable in connection with implementing the C-Corp Election, and authorizes Medley LLC and the managing member to conduct the business, operations and accounting of Medley LLC in a manner consistent with the procedures appropriate for those of an entity treated and classified as a corporation for income tax purposes.

The foregoing summary of the Amendment to the Medley LLC Operating Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference into this Item 8.01.