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Thomas McJD
Thomas McJD, Attorney
Category: Business Law
Satisfied Customers: 6504
Experience:  Experienced in Corps, LLCs, Partnership, etc.
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What is time frame in SC for a capital call in an LLC

Resolved Question:

What is time frame in SC for a capital call in an LLC
Submitted: 1 year ago.
Category: Business Law
Expert:  Thomas McJD replied 1 year ago.

Hello, I will be happy to assist you with your question. Please note that I cannot provide legal advice – I can only give you information concerning the legal issues raised by your question.

I DO NOT receive credit for my work until you rate my answer as OK service” or higher. Please DO NOT RATE MY ANSWER as "Bad service" or "Poor service" (or the 2 stars on the left if you see stars), as such a rating leaves negative feedback for me personally. Instead, if you feel one of those ratings would be appropriate, please reply to me via the REPLY or CONTINUE CONVERSATION. If I still can’t help, reply again and I will opt out, but don’t leave a bad rating for me.

Your Answer:

In order to require members to make additional contributions to the LLC, the terms of how that will be handled must be set forth in the operating agreement. If the operating agreement requires such contributions, it generally requires notice of a date by which the contributions must be made.

There is no statute that fixes a certain period of time. In this type of context, courts will often state that notice must be "reasonable" under all the facts, so it's not unusual to give 30 days notice or longer (again, it depends on all the facts).

As noted above, if you need clarification, please do let me know. And, again, PLEASE DO NOT leave a bad rating for me. If you don’t like my answer and want to work with someone else, let me know with a reply and I will opt out.

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Thanks.

Customer: replied 1 year ago.
No operating agreement was created, she had a "friend" who was an attorney who going to help us with it. I inquired several times as to appointment to meet and had a few ideas down but got nowhere. In a nut shell, 50/50 partnership filed with SC Sec of State. However, I have contributed to finances when she has not. I have not been fully reimbursed for several years, meanwhile she still takes distributions for personal items, has taken inventory that is still unpaid and has not fully reimbursed company back on loans. Classic case of not being in business with friends. I am ready to move on without her and want to do it the correct way.
Expert:  Thomas McJD replied 1 year ago.

Each member of the LLC owns the LLC to the extent of his or her contributions, so if you sell the LLC, dissolve it and distribute assets, etc., then that distribution will be made in accordance with capital contributions (and taking into account reimburseable expenses, costs, outstanding loans and any other pertinent information).

 

Your best bet, since there's no operating agreement, is to have a local attorney assist you will the sale or dissolution and distribution of the LLC assets -- that's the only way to ensure it's all done in a way that later protects you from claims by the other LLC member that you didn't do something properly.

 

If you need additional clarification, please do let me know. And, again, PLEASE DO NOT leave a bad rating for me. If you don't like my answer and want to work with someone else, let me know with a reply and I will opt out.

I do not receive credit for my work until you rate my answer as "OK service" or higher. Bonuses are always appreciated.

If you later open a new question and would like my assistance, please begin the question with "To TMcJD...." This will ensure that only I answer the question.

Thanks.

Customer: replied 1 year ago.
If I understand correctly, if she initially did not contribute the initial startup cost and has not contributed regularly since start of business, when bills needed to be paid and not enough in account at that time, I have covered majority costs. She been paid for the work she has done, been reimbursed for all costs, and still owes business money.
Expert:  Thomas McJD replied 1 year ago.

yes, that is correct (assuming you don't have a document that fixes percent ownership and other financial matters -- which is typically part of the operating agreement).

 

Thus, you will need to have a record of your contributions and be able to prove the loans to the other member, etc., but ultimately it sounds as though you'll come out on top.

 

But you definitely need a local attorney's assistance. Otherwise, you're leaving yourself wide open to getting sued by your former partner in the LLC.

 

If you need additional clarification, please do let me know. And, again, PLEASE DO NOT leave a bad rating for me. If you don't like my answer and want to work with someone else, let me know with a reply and I will opt out.

I do not receive credit for my work until you rate my answer as "OK service" or higher. Bonuses are always appreciated.

If you later open a new question and would like my assistance, please begin the question with "To TMcJD...." This will ensure that only I answer the question.

Thanks.

Customer: replied 1 year ago.
The only "documents" with 50/50 split are on tax return schedule k's and Sec of State LLC form
Expert:  Thomas McJD replied 1 year ago.

I don't see that being an issue.

 

If you need additional clarification, please do let me know. And, again, PLEASE DO NOT leave a bad rating for me. If you don't like my answer and want to work with someone else, let me know with a reply and I will opt out.

I do not receive credit for my work until you rate my answer as "OK service" or higher. Bonuses are always appreciated.

If you later open a new question and would like my assistance, please begin the question with "To TMcJD...." This will ensure that only I answer the question.

Thanks.

Customer: replied 1 year ago.
I have all of the records, even to the check stubs where she wrote checks to her company for various items. I do not anticipate llc will be reimbursed by her, but I have done 99/ of daily managing member duties, and want to keep llc going, just because I have dedicated the last 6 years of my professional life to it.

I planned on giving her the capital call letter by the end of the week, with hopefully less than 30 days notice if I could, if not I will deal with this timeframe. I am at a point that I do not trust her that she will not take inventory or working items need to perform daily task for clients, based on past performance with finances.

Once letter was delivered, I planned on locking working documents in storage closet, contacting vendors that she was no longer associated with llc and securing check book, and having her desk items packed up for pick up. Is there a legal definition for what her actions have been towards llc and myself?
Expert:  Thomas McJD replied 1 year ago.

I know you're wanting to dig to the bottom of this, but this forum only helps so much -- after that, it's a necessity to speak to a local attorney, and in your case that's your next step.

 

I can't tell you what to do, but you should certainly not begin contacting anyone and telling them she's no longer a member when she legally is a a member.

 

Giving her notice of a capital call, which she won't pay, does not automatically remove her as a member. You'll have to take the appropriate legal process to do that. This usually is not possible without court intervention when there are only two members and neither holds a majority of the interests in the LLC. Thus, this is not a simple matter and really does require a local attorney's services. They can spend a lot more time with you and communicate with you much better than you can do online. It's more expensive, yes, but very valuable.

 

There's so much that I cannot properly convey or assist you with online because back and forth communication is too time consuming and the issues you have will require an attorney hitting the law books and spending some time ensuring there's no loop hole in the law that could bite you.

If you need additional clarification, please do let me know. And, again, PLEASE DO NOT leave a bad rating for me. If you don't like my answer and want to work with someone else, let me know with a reply and I will opt out.

I do not receive credit for my work until you rate my answer as "OK service" or higher. Bonuses are always appreciated.

If you later open a new question and would like my assistance, please begin the question with "To TMcJD...." This will ensure that only I answer the question.

Thanks.

Customer: replied 1 year ago.
You have been a huge help and I appreciate your time and advice. I will contact an attorney to get legal side started. Thank you.
Expert:  Thomas McJD replied 1 year ago.

You're very welcome and thank you too.

Please don't forget to rate my answer as "OK Service" or higher. Otherwise, I cannot receive credit for my time. Thanks.

Thomas McJD, Attorney
Category: Business Law
Satisfied Customers: 6504
Experience: Experienced in Corps, LLCs, Partnership, etc.
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