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Good evening. Does the Operating Agreement of the LLC address the issue of additional cash needed by the LLC?
There is....I was answering your question while you replied....in the Limited Liability Company Act. If the Operating Agreement is silent, and the members cannot agree upon how any additional funding will affect ownership, then the allocation of profits and losses will be based on the capital accounts of the members, including these additional contributions, and cash distributions will be distributed pursuant to those capital accounts. See Sections 25.15.200 and 25.15.205 of the Act. Typically, however, if the foregoing is not enough of a carrot for the contributing members and the Operating Agreement is silent, the members willing to put up money will mandate an amendment to the Operating Agreement to be signed by all members before putting any money up so that the contributing members get what they demand before they put the money up. This would usually result in these members getting a preferential yield and/or preferential distribution and/or a change on ownership interests.
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