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Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 46202
Experience:  32 years of experience practicing law and a businessman.
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QUESTION Before the one partner was removed from the LLC...

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QUESTION: Before the one partner was removed from the LLC... when we discovered this one partner had raised his weekly pay without notifying us we brought this action to his attention that he could not pay himself back for any monies he put into the company without a vote. When we discovered he had increased what he was paying himself and he also took out a lump sun of money from the checking account for the very same reason we told him that without a votes it was illegal. He became very upset saying he could do whatever he wanted and what he did was not illegal. He indicated it was money he spent and had every right to pay himself back. We told him he could not do that without informing the other managing agents of the LLC. Is he right or are we?
Submitted: 3 years ago.
Category: Business Law
Expert:  Richard replied 3 years ago.

Good evening. You are correct...not him. He has a fiduciary duty to the LLC and the other members and he cannot simply unilaterally decide he is entitled to take money from the LLC for his own benefit without the joinder of the other members.

 

 

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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.

Customer: replied 3 years ago.
After he refused to stop this behavior... the other managing agent and myself (also a managing agent) voted him off the LLC ( there was only three of us) we then took him off the checking account... we then changed the lockes on the door... all voted... we felt we did the properly because we were acting in the best interest of protecting the LLC/ company? Did we do this correctly?
Expert:  Richard replied 3 years ago.

Yes....you cannot simply take his LLC interest from him...but you can lock him out based on his actions. Eventually, you will need to value his interest reduced by what he took from the LLC illegitimately.

 

 

Customer: replied 3 years ago.
What does that mean his LLC interest? We have an agreement where he owns 20% of the business I 60% and another partner 20% ... so how does this work.

When you said we can lock him out based on his actions do you mean Lock him out of the business
(change the locks) and take him off the LLC so we were able to take him off the checking account and any voting rights in the LLC just not whatever his interest is? Is his interest the 20% in our agreement?
Expert:  Richard replied 3 years ago.

You can freeze his interest so he has no right to act until you can get him out of the LLC. Given his actions of helping himself to the LLC's money, his access can be restricted. But, if he owns 20% of the company....and let's say for example the LLC is worth $1,000,000...his interest is worth $200,000 without accounting for what he stole from the LLC.....you don't have the right to simply take his 20% interest.

 

 

I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.

Richard, Attorney
Category: Business Law
Satisfied Customers: 46202
Experience: 32 years of experience practicing law and a businessman.
Richard and 9 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.
If the LLC only asset is its furniture, no money and we currently are not making our bills... and there are bills the LLC owes... the two partners who still have voting rights vote to sell the funiture to pay off bills and whatever is left distribute between the 3 partners accordingly... example if there is (just for simple math) $100 left - I get $60 one partner gets $20 and the other partner gets$20?
Expert:  Richard replied 3 years ago.
Yes, but you can deduct 80% of what you would pay him....because for every $1 he took, 80% of it belonged to the other two of you.
Customer: replied 3 years ago.
So under so we choose to close the business now can the two remanding managing agents of the LLC do so? If so what is the proper way to close out the LLC.
Expert:  Richard replied 3 years ago.
Yes, you can force a dissolution of the company...you have the votes.
Richard, Attorney
Category: Business Law
Satisfied Customers: 46202
Experience: 32 years of experience practicing law and a businessman.
Richard and 9 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.
How do we dissolve? Do we have to get an appraisal of the furniture before selling or can we just sell it and get what we can to pay off any remaining debt? Does he have any rights to see any of the bank records after he was removed from the LLC for his actions because he had all the records prior because he was keeping them.
Expert:  Richard replied 3 years ago.
I'm going to opt out and let another expert help you from here. I've answered a series of your questions and it's probably best for someone else to help you from here. Take care.

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