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MShore Law
MShore Law, Attorney
Category: Business Law
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Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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If I have made over $100,000 in contributions to keep an LLC

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If I have made over $100,000 in contributions to keep an LLC operating, do I have a "right of contribution" of the other partners to reimburse me in order to keep their percentages?
Submitted: 2 years ago.
Category: Business Law
Expert:  MShore Law replied 2 years ago.
Thank you for the post, I am happy to assist you by answering your questions. Is there an operating agreement in place stipulating contribution percentages to be made?
Customer: replied 2 years ago.
We have an operating agreement which stipulates the percentages each partner has per their original investments. Additional money put into the company was done in the form of a loan from each person each time. This year, no other partner put any money into the company except for myself.
Expert:  MShore Law replied 2 years ago.
While there is no right of contribution per se, you can take action against each member on behalf of the LLC to compel contribution as their respective failure to contribute stood to harm and if such lack of contribution continues will harm the LLC unless you make up the deficit caused via personal contribution. Is the LLC generating a profit?
Customer: replied 2 years ago.

The LLC is in a deficit position. Two of the partners have no money. The LLC is

in a lawsuit with the other partner for his actions which have caused the demise of the LLC. I am trying to keep it going and bring our product back stateside for manufacture and this is why I have spent so much money. The partner who we are suing still has signatory obligations to our bank for loans but we are willing to stop the lawsuit in return for his percentage of the company and because he refuses to put any more money into the company to help recoup our losses

Expert:  MShore Law replied 2 years ago.
Thank you, XXXXX XXXXX your operating agreement state with respect to forcing a liquidation of a member's interest? Also, is the member whom is not the subject of the lawsuit in any way in breach of the obligations he has per the operating agreement?
Customer: replied 2 years ago.
I'm checking. I don't believe we have any section which pertains to liquidation of a member's interest ... only in the event of a death, etc. I will look...one moment
Expert:  MShore Law replied 2 years ago.
ok,thank you
Customer: replied 2 years ago.

 

I couldn't cut and paste the section from our operating agreement, so I uploaded the document .. can you go to the section on contributions - Article VIII

 

your system will not allow for an uplink I can't send this to you

 

Expert:  MShore Law replied 2 years ago.
regrettably not, but if you summarize the section that should suffice.
Customer: replied 2 years ago.
It does say that with the dissolution of the company, that all partners take part in gains or losses. So If I disolved the company and produced the product through my other company (which has been footing the bill this past year), then all partners in actuality should take part in the losses. If I did this according to the operating agreement, would there be any problem with manufacturing and selling the new product through my other company?
Expert:  MShore Law replied 2 years ago.
First the operating agreement must grant one member the ability to take a unilateral action of dissolution, if the operating agreement permits this then there is the issue of misappropriation of trade secrets and the members of your current LLC could sue you claiming that your new LLC stole intellectual property and is now using it.
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25285
Experience: Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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