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Richard
Richard, Attorney
Category: Business Law
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Experience:  32 years of experience practicing law and a businessman.
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My husband and I are partners with another couple in an LLC

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My husband and I are partners with another couple in an LLC in Illinois. We want out. We've wanted out shortly after we started. My husband and I have never seen a dime. What do I need to do?

Good morning. I can understand your frustration. The first thing to do is to check your Operating Agreement for the LLC to see what, if any, provisions there are regarding either a buy/sell arrangement if one party wants out or the withdrawal of a member. If not, this will be governed by the Illinois Limited Liability Company Act. I have provided the applicable provisions of that Act for you below.

 

Sec. 35-1. Events causing dissolution and winding up of company's business. A limited liability company is dissolved, and, unless continued pursuant to subsection (b) of Section 35-3, its business must be wound up, upon the occurrence of any of the following events:
(1) An event specified in the operating agreement.
(2) Consent of the number or percentage of members specified in the operating agreement.
(3) An event that makes it unlawful for all or substantially all of the business of the company to be continued, but any cure of illegality within 90 days after notice to the company of the event is effective retroactively to the date of the event for purposes of this Section.
(4) On application by a member or a dissociated member, upon entry of a judicial decree that:
(A) the economic purpose of the company is likely to
be unreasonably frustrated;
(B) another member has engaged in conduct relating
to the company's business that makes it not reasonably practicable to carry on the company's business with that member;
(C) it is not otherwise reasonably practicable to
carry on the company's business in conformity with the articles of organization and the operating agreement;
(D) the company failed to purchase the petitioner's
distributional interest as required by Section 35-60; or
(E) the managers or members in control of the
company have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent with respect to the petitioner.
(5) On application by a transferee of a member's interest, a judicial determination that it is equitable to wind up the company's business.
(6) Administrative dissolution under Section 35-25.
(Source: P.A. 90-424, eff. 1-1-98.)

 

Sec. 10-15. Member's right to information.
(a) A limited liability company shall provide members and their agents and attorneys access to its records, including the records required to be kept under Section 1-40, at the company's principal place of business or other reasonable locations specified in the operating agreement. The company shall provide former members and their agents and attorneys access for proper purposes to records pertaining to the period during which they were members. The right of access provides the opportunity to inspect and copy records during ordinary business hours. The company may impose a reasonable charge, limited to the costs of labor and material, for copies of records furnished.
(b) A member has the right upon written demand given to the limited liability company to obtain at the company's expense a copy of any written operating agreement.
(Source: P.A. 90-424, eff. 1-1-98.)

 

 

I hope this has given you the guidance you were seeking. I wish you the best of luck!

 

 

 

The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

Richard and 2 other Business Law Specialists are ready to help you
Customer: replied 7 years ago.
Thanks for the response. I will look for the documents we signed to form the LLC and then take them to an attorney. I hope this will not cost a lot. And what do I do about filing taxes in the meantime?Frown

My pleasure. With regard to your taxes for 2009, I would file an extension. I would then send your recalcitrant member a certified, return receipt requested, letter detailing the past history and demanding the information and your K-1 for the LLC so you can file your tax returns. Also, request a meeting so you can discuss either the sale of your interest or the dissolution of the LLC. Inform him that if he does not timely comply with your demand, you will have no choice put to pursue this through a lawsuit. This may spur him enough to cause him to settle things with you. He wants to be sued even less than you want to spend the money suing him...though you will get awarded your attorney's fees in this kind of suit. If the information he provides shows he has violated his fiduciary duty and/or stolen from the LLC, you can pursue a civil suit for damages and/or criminal prosecution.

 

 

I hope this has given you the guidance you were seeking. I wish you the best of luck!

 

 

 

The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

Richard and 2 other Business Law Specialists are ready to help you