Leaving LLC

[KBOne]

What is the name of your state (only U.S. law)? Michigan

I'm a 50/50 owner in a member-managed LLC in Michigan. My partner and I have no operating agreement. I want out. All I'm asking is for my partner and I to to divide the business assets equally once all outstanding bills are paid. Im not asking for any goodwill and am happy to have my partner take over the business completely. He plans to continue the business. He wants me to sign a non-compete and non-disclosure, even though we never had these before. I'm hesitant to do this, even though I have no intention of trying to take clients. He's not buying anything from me...I'm just transitioning ownership to him.

The corporate attorney is telling me I have fiduciary duties and have to sign the noncompete. I disagree. I just want to dissociate from the LLC and move on.

Thoughts?

Thanks.

 

[davew128]

Who's corporate attorney is telling you that you have fiduciary duties and to whom?

 

[tranquility]

What is the name of your state (only U.S. law)? Michigan

I'm a 50/50 owner in a member-managed LLC in Michigan. My partner and I have no operating agreement. I want out. All I'm asking is for my partner and I to to divide the business assets equally once all outstanding bills are paid. Im not asking for any goodwill and am happy to have my partner take over the business completely. He plans to continue the business. He wants me to sign a non-compete and non-disclosure, even though we never had these before. I'm hesitant to do this, even though I have no intention of trying to take clients. He's not buying anything from me...I'm just transitioning ownership to him.

The corporate attorney is telling me I have fiduciary duties and have to sign the noncompete. I disagree. I just want to dissociate from the LLC and move on.

Thoughts?

Thanks.

Since I am uncertain you have the right to withdraw and get ANY assets of the business, why don't you sign and make nice?

450.4305Distributions to withdrawing member.
Sec. 305.Until the effective date of withdrawal, a withdrawing member shall share in any distribution
made in accordance with section 304. An operating agreement may provide for an additional distribution to a
withdrawing member. If a provision in an operating agreement permits withdrawal but is silent on an
additional withdrawal distribution, a member withdrawing in accordance with the operating agreement is
entitled to receive as a distribution, within a reasonable time after withdrawal, the fair value of the member's
interest in the limited liability company as of the date of withdrawal based upon the member's share of
distributions as determined under section 303.
History: 1993, Act 23, Eff. June 1, 1993;Am. 1997, Act 52, Imd. Eff. July 1, 1997.

450.4509Withdrawal of member; distribution; expulsion.
Sec. 509.(1)A member may withdraw from a limited liability company only as provided in an operating
agreement. A member withdrawing pursuant to an operating agreement may become entitled to a withdrawal
distribution as described in section 305.
(2)An operating agreement may provide for the expulsion of a member or for other events the occurrence
of which will result in a person ceasing to be a member of the limited liability company.
History: 1993, Act 23, Eff. June 1, 1993;Am. 1997, Act 52, Imd. Eff. July 1, 1997.

You would have been better protected if you had an operating agreement.