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LLC Membership issue - No operating agreement in place

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jimjaix

Junior Member
We have a LLC with 3 members, one of the members is having issue and doesn't work. She agrees to leave before but now she wants to split the profit without doing any work. What are my options? Again, no operating agreement in place, the company formed based on trust (very idea).

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


latigo

Senior Member
We have a LLC with 3 members, one of the members is having issue and doesn't work. She agrees to leave before but now she wants to split the profit without doing any work. What are my options? Again, no operating agreement in place, the company formed based on trust (very idea).

What is the name of your state (only U.S. law)?
New York
What is difficult about grasping the concept that two voices can speak louder than one?

If the two of you can't figure how to squeeze her into an uncomfortable corner, then you should disassociate. Articles of Dissolution of the LLC can be filed upon the consent of a majority of the members.

So why put up with her when there is not need? Don't be like the two guys from North Dakota who are being buried in legal fees by their litigious, co-director brother because they don't have the good sense to dissolve the family held corporation!

Just ask yourself if you want to be facing the same problem a year from now.
 

jimjaix

Junior Member
What is difficult about grasping the concept that two voices can speak louder than one?

If the two of you can't figure how to squeeze her into an uncomfortable corner, then you should disassociate. Articles of Dissolution of the LLC can be filed upon the consent of a majority of the members.

So why put up with her when there is not need? Don't be like the two guys from North Dakota who are being buried in legal fees by their litigious, co-director brother because they don't have the good sense to dissolve the family held corporation!

Just ask yourself if you want to be facing the same problem a year from now.

Thanks for the response, dissolution is our last option. I am not sure how we can squeeze her out since we don't have an operating agreement. I believe litigation fee is sky high therefore we don't want to go that route, any opinions and advice are greatly appreciated. We do not want to deal with her a day or month from now, let along a year but do want to retain the company. Thanks
 

adjusterjack

Senior Member
Can't tell you how many time a week I read that people have an unbearable problem and their responses to suggested solutions are:

Can't do this.
Won't do that.
Can't afford the other thing.

The upshot here is that she's a 1/3 owner, she's entitled to 1/3 the profits whether she works or not.

Feel free to keep paying her until you decide to pick a solution and run with it no matter how painful it is.
 

HRZ

Senior Member
Well if I control 2/3 of the votes I'm pretty sure I can manage to run things such that there are no profits in the pot to divide ...and if she has personally guaranteed any debt of the LLC I might be able to make her sweat as well..
 

jimjaix

Junior Member
Well if I control 2/3 of the votes I'm pretty sure I can manage to run things such that there are no profits in the pot to divide ...and if she has personally guaranteed any debt of the LLC I might be able to make her sweat as well..
Thanks HRZ, that's what we are looking to do. The lease agreement has personal guaranteed, we will need to seek the landlord's help to move forward with this. We were nice enough offer her the initial investment but she wanted me.
 

HRZ

Senior Member
I might avoid anything that looks like a conspiracy with a LL against a stockholder ...lay your cards close .
 

jimjaix

Junior Member
I might avoid anything that looks like a conspiracy with a LL against a stockholder ...lay your cards close .
Yes, we have the upper hand since we have a majority voting power to move things forward, we have invoices/receipts to back up our claims. We could have dissolved the LLC and she won't get a penny out of it but didn't want to go that low/dirty.
 

jimjaix

Junior Member
Yes, we have the upper hand since we have a majority voting power to move things forward, we have invoices/receipts to back up our claims. We could have dissolved the LLC and she won't get a penny out of it but didn't want to go that low/dirty.
Not sure if this is an option, please advice.

Members
Madelyn, Jennifer and Sara (Sara is the one that's causing issue).

Can Madelyn create her own LLC, and with the major vote (Madelyn and Jennifer), Madelyn going to buy this company at a lower cost since the book is losing money?

Thanks
 

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