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LLC Question 155

LLC Operating Agreement Form Price: $16.99 (free trial)
PLLC Operating Agreement Form Price: $20.99 (free trial)

Question: I was a member in an LLC with one other member. We did have a written agreement, right from the Internet. The split was 65/35 after 1 year 10 months I wanted out. I was given a partial withdrawal payment the week I left. I have not received anything since that time. I just found out that after the first 8 months the other formed another LLC under his own name doing the same products as our LLC. He never said any thing about another LLC to me. Our agreement states you need a supermajority vote 66% to do other business. Just last week I got a withdrawal offer that has a lot of incorrect information. Numbers he just make up and equipment prices that are not true. I was also sent a release letter back dated so the 10% penalty would not apply. What can I do?

Response: I do not see that the other member has left you much of an option other than hiring a lawyer to threaten suit for breach of contract (i.e., the LLC operating agreement) and follow through with the suit should the other member not offer you a reasonable payment for your LLC interest. The lawyer will need to review the operating agreement, the release that you signed, and other facts (such as the potential competing business started by the other member) and give you an opinion on how to proceed. Often times, an adverse party in these types of negotiations becomes more amenable to settlement after he or she starts receiving letters from your attorney. Check to see if the operating agreement provides for payment of attorneys fees to the prevailing party in a suit for breach of contract. If so, that raises the stakes in this chess match.

Submitted: 12/19/2007; Mike, Texas
Response: 12/22/2007; JJR


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