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J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4385
Experience:  Experienced and trained in the area of business law.
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I am a 25% owner/member of an 8-month old LLC in AZ with no

Customer Question

I am a 25% owner/member of an 8-month old LLC in AZ with no OA. There are four partners. I wish to resign/leave the LLC immediately without verbal discussion with the Partners (past discussions have been quite ugly!) What steps do I take to resign? Am I entitled to 25% of the money in the bank accounts that was not paid out to the partners? Will I still be liable for my portion of the lease upon resignation?
Submitted: 5 years ago.
Category: Business Law
Expert:  J.Hazelbaker replied 5 years ago.

The terms of the OA provide the only mechanism for you to exit the LLC, short of litigation. There should be several paragraphs that address the exit by a member and buyout procedure.

 

Typically, the terms include the exiting member recuping his/her initial contribution. Where the LLC has been profitable, it could include a share of those profits equal to the members % interest. Again, however, these issues will be addressed in the OA.

 

To initiate the process, I would send a certified letter return receipt requested to each of the other members stating your withdrawal and demanding the distribution you are entitled to based on the OA's terms. In the rare event that the OA is silent on the matter, then I would demand the monetary equivalent of my full membership interest.

 

As long as you did not personally guarantee the lease, you will not be responsible for it upon leaving the LLC.

 

Please let me know what follow-up questions you may have.

 

 

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In legal matters, time is of the essence. As such, you should contact an experienced lawyer right away to protect your legal rights!

Customer: replied 5 years ago.
Thank you for your answer, but there is NO Operating Agreement.

What are the liabilities for the exiting Member?
Expert:  J.Hazelbaker replied 5 years ago.

Here are the statutes that govern your situation:

 

29-734. Withdrawal of member

A member may withdraw from a limited liability company at any time on mailing or delivering written notice of withdrawal to the other members at their last known addresses set forth in the list maintained by the limited liability company pursuant to section 29-607, subsection A, paragraph 1, but if the withdrawal violates an operating agreement, the limited liability company may recover from the withdrawing member damages for breach of an operating agreement and offset the damages against any amount otherwise distributable to him.

 

29-707. Distributions on withdrawal

On any event of withdrawal of a member, except as otherwise provided in an operating agreement, the withdrawn member and the withdrawn member's personal representatives, successors and assigns do not have the right to receive any distribution by reason of the withdrawal but do have the rights of an assignee of the withdrawn member's interest in the limited liability company to receive distributions with respect to the member's interest during any continuation of the business of the limited liability company and during and on completion of winding up less any damages recoverable against the withdrawn member if the event of withdrawal violated an operating agreement.

 

Expert:  J.Hazelbaker replied 5 years ago.

Please let me know, if you have any follow-up questions.

 

If my answers have been helpful, I hope you will Accept it so that I get credit. That helps the service to continue.

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