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LLC memebr rights when other member quits?

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M

Mikmej

Guest
undefinedWhat is the name of your state?

New York

Hello,

I have a really messy situation on my hands and wanted to get some input from legal experts before hiring a lawyer.

In 2002 my partner and I entered into an LLC agreement as 50/50 owners of a business. He came to the table with far less money that me (about half as much) but I foolishly agreed that we would be equal partners.

Making metters worse, we never took the time to have a partnership agreement drawn up (huge mistake I know :( ). The business is surviving, but struggling as we approach the two year anniversary and he now has decided he wants out. He's sold his house and is moving out of state.

Because of private loans, back taxes that are due etc. the business is now some $80.000 in debt. My question is, what are my rights as the person who is going to continue with the business.

1. He says he wants to be bought out (can't afford to) or remain a 50% partner. Can he do that considering he put in almost no money in the beginning and the business has accrued a greater debt since he's been involved with it? I mean, how can someone basically quit and still expect to be an equal partner when they didn't put in equal work or moeny?

2. He wants retroactive pay for the period that we haven't been drawing checks (end of April until now), is he entitled to this; especially if records show I do more than twice as much work as him?

3. Can I realistically dissolve him from the company, save for a small portion of profits going forward once all the debt has been paid down?


I know this is a messy one, but I'd appreciate any insights anyone can offer.

Thank you for reading.
 


J

Jack Mevorach, Esq.

Guest
You're right - it's messy. Too complicated for a detailed written response. But, here's two thoughts: (1) Because no written agreement between the two of you, you're governed by Limited Liability Law of State of New York; (2) Regardless of what law applies, the practical consideration of the necessity of legal fees will determine whether the law will actually be applied.
 

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