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LegalPro
LegalPro, Attorney
Category: Business Law
Satisfied Customers: 589
Experience:  33 years of legal experience, with an emphasis on small business organization.
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Business Law Question: We have an LLC set-up (Delaware) and

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Business Law Question: We have an LLC set-up (Delaware) and are finally ready to pitch for investor funding... One of our main partners got into some financial troubles last year, and to put it bluntly, left the country to his home town in Europe, where he's a national... He is still a part of the company, however, do we need to protect the LLC in some manner so that his financial ghosts don't haunt us down the line...? And if so, in what manner should we structure going forward...? Cheers...
Submitted: 7 years ago.
Category: Business Law
Expert:  LegalPro replied 7 years ago.
It is doubtful that his personal creditors could impact the company if he did not deal with the creditors on behalf of the LLC. I am assuming that he may be a party to an operating agreement or appear on the LLC's articles of organization. If so, it may be prudent to re-execute an operating agreement between remaining members establishing that he is no longer a member. As far as his claim against the LLC for his interest, he could only claim an interest that was allowed by the terms of the operating agreement, if one was executed that included him. <======================>Please advise by reply if you would like the answer explained or clarified. Please ACCEPT if the answer satisfies your inquiry. Your positive feedback and bonuses are appreciated. I will always opt out of a question upon the customer’s request by reply so that another expert may respond, no offense taken.
Customer: replied 7 years ago.
Thanks for the info...couple of clarifications: Although he's in Europe, he is still a part of the venture..our business is in the emerging media space and so having him in our European Office is actually a good thing... He is also the majority partner in the LLC (75%) Partner 2 - (15%) Partner 3 - (10%) And although he did not rack up the almost $500K in obligations on behalf of the LLC, we're a little concerned that should his name appear on future business dealings (along with our investors), that the LLC could be vulnerable to a lawsuit, or such...
Expert:  LegalPro replied 7 years ago.
I believe that the operating agreement, if any would establish his rights with respect to his ability to enforce his interest in the LLC in any way. Is there an operating agreement in effect, and what does it describe relative to dissolution or removal of a member?
Customer: replied 7 years ago.
Yes, there is an Operating Agreement in effect...standard clauses; member can withdraw his/her interest, member's interests can be purchased, etc... How would this be pertinent to our situation as he is the majority shareholder...? Just wondering...
Expert:  LegalPro replied 7 years ago.
I think that his interest must in some way be put to rest before the LLC may venture forth without his association with the business. The LLC could in effect dissolve and re-institute without his involvement. Without his having violated a term of the OA, the LLC or remaining members may have no cause of action against him, and his rights under the OA would remain enforcible. I think fulfilling his rights under the OA is the key to future operation without his association. <======================>Please advise by reply if you would like the answer explained or clarified. Please ACCEPT if the answer satisfies your inquiry. Your positive feedback and bonuses are appreciated. I will always opt out of a question upon the customer’s request by reply so that another expert may respond, no offense taken.
Customer: replied 7 years ago.
One last thought, we still want him involved...so is the suggestion that we dissolve the LLC, reinstitute the LLC without him on the books and then structure a separate agreement with him moving forward...?
Expert:  LegalPro replied 7 years ago.
That does sound plausible, especially where you wish to retain an amenable relationship with him going forward. I am hoping he would be understanding enough to cooperate. As I'm sure you fully appreciate, business dealings are not personal, and your wishing to undertake sound business practices should not be interpreted as a personal affront. <======================>Please advise by reply if you would like the answer explained or clarified. Please ACCEPT if the answer satisfies your inquiry. Your positive feedback and bonuses are appreciated. I will always opt out of a question upon the customer’s request by reply so that another expert may respond, no offense taken.
Customer: replied 7 years ago.
I hope you do not mind if I solicit another opinion...just need another POV on the situation...(will return if applicable)...cheers...
Expert:  LegalPro replied 7 years ago.
I will opt out of the question allowing another to respond. I wish you the very best in the resolution of your legal concerns.

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