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My Father invested $85,000.00 to open a restaurant with partner

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who also invested the same...
My Father invested $85,000.00 to open a restaurant with partner who also invested the same amount. My Father got cancer and for last 2 years has been battling that. He has been given only a few months to live. As his financial power of attorney I am trying to organize his affairs. I discovered that neither partner signed an LLC agreement. They had one drawn up but never signed. The partner has been running the business in the last 2 years. I have asked him to sign an agreement but he is refusing.He says company not doing well, he may have to close. Legally, how do I make sure my Father's initial investment is protected.
Submitted: 4 years ago.Category: Business Law
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7/29/2013
Business Lawyer: Law Pro, Attorney replied 4 years ago
Law Pro
Law Pro, Attorney
Category: Business Law
Satisfied Customers: 24,870
Experience: 20 years experience in business law - sole proprietor, partnership, and corporations
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Welcome to JustAnswer! My goal is to do my very best to understand your situation and to provide a full and complete excellent answer for you.

My name is XXXXX XXXXX I'm going to assist you with your question.

Please bear with me if you believe my answer isn’t coming fast enough because I’m also working with other customers too. I apologize for any seemingly late response.


Sorry for your situation.

Did they actually form an LLC and file the documentation with the state?

If so, what state did they form the LLC in?
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Customer reply replied 4 years ago
They had the papers drawn up but never signed the documents and therefore never filed with the state. However, the business entity is filed with the state.
Business Lawyer: Law Pro, Attorney replied 4 years ago
Filed as what with the state?
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Customer reply replied 4 years ago
I found the company through the secretary of states office registration web site. They did not sign their LLC partnership documents.
Business Lawyer: Law Pro, Attorney replied 4 years ago
But they did file their registration as an LLC - filed the formation documents with the state to form an LLC. Correct? They have been paying taxes as an LLC (although an LLC is taxed as a partnership) - correct?
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Customer reply replied 4 years ago
I see what you mean. Yes their tax returns shows they filed as an LLC and both their names are XXXXX XXXXX tax returns.
Business Lawyer: Law Pro, Attorney replied 4 years ago
Yes, sorry if I was confusing.

However, although no LLC agreement was executed - then they would Georgia LLC Act.

So, regardless that the LLC agreement isn't signed - if the LLC is dissolved or "wound-up" the following statutes would apply:

The Georgia Limited Liability Company Act, O.C.G.A. § 14-11-100, et seq. (the “GLLCA”) governs the formation, operation and dissolution of LLCs in Georgia.

Typically, an LLC “operating agreement” executed by the members governs the management of an LLC. The operating agreement, —which acts like the articles of incorporation, bylaws and a shareholder agreement for a corporation all in a single document— may contain provisions requiring adherence to a social purpose and such purpose and the values it embodies may be interwoven throughout the operating agreement.

A Georgia LLC is governed by the terms of both its articles of organization and its operating agreement. In the event of a conflict between a provision of the articles of organization and a provision of an operating agreement, the provision of the articles of the organization governs. The GLLCA permits oral operating agreements, though in many cases any deviation from the default rules in the GLLCA must be made pursuant to a written operating agreement.

The GLLCA permits a Georgia LLC to merge with or into one or more “business entities.” A “business entity” includes another Georgia LLC, a foreign LLC, a Georgia or foreign limited partnership, a general partnership, or a Georgia or foreign corporation. Before merging, each party to the merger must adopt a written plan of merger and the surviving entity must file articles of merger with the Georgia Secretary of State. Unless the articles of organization or a written operating agreement requires a different vote, the members of a Georgia LLC must unanimously consent to any such merger. It should be noted that the GLLCA also provides for conversion of other business entities into XXXXX

A Georgia LLC may not have perpetual existence; the GLLCA requires that each Georgia LLC specify in its articles of organization or a written operating agreement a date upon which the LLC shall dissolve if the LLC has not earlier dissolved. Section 14-11-602 of the GLLCA further provides that a Georgia LLC is dissolved upon the first to occur of the following (i) at the time specified in the articles of organization or a written operating agreement, (ii) upon the happening of events specified in the articles of organization or a written operating agreement, (iii) subject to contrary provision in the articles of organization or a written operating agreement, at a time approved by all members, (iv) for Georgia LLCs formed prior to July 1, 1999, subject to contrary provision in the articles of organization or a written operating agreement, 90 days after the dissociation of a member unless all other members consent in a writing to the continuation of the LLC, or (v) for Georgia LLCs formed on or after July 1, 1999, subject to contrary provision in the articles of organization or a written operating agreement, 90 days after the dissociation of the last remaining member of the LLC.

Notwithstanding the foregoing, a Georgia LLC will not be dissolved if, prior to the filing of a
certificate
of termination with the Georgia Secretary of State, either (a) the LLC’s articles of organization or operating agreement are amended such that after giving effect to the amendment the event no longer gives rise to dissolution, or (b) a decision to continue the LLC is made by all of the members of the LLC (provided the LLC has at least one member). A Georgia LLC may also be dissolved by judicial decree from a court in the State of Georgia whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or a written operating agreement, or by administrative dissolution by the Georgia Secretary of State if the LLC has not timely filed its annual
registration
and all required fees, fails to have a registered agent or office in the State of Georgia or the Georgia Secretary of State has not been properly notified of a change in the registered agent or office, or there is a problem with the filing fees submitted to the State of Georgia.

Unless otherwise provided by the articles of organization or a written operating agreement, upon dissolution the affairs of the LLC shall be wound up by the members or managers in whom management of the LLC was vested, or if there are no such managers or members, by one or more persons designated by those persons who are entitled to receive a majority of the subsequent distributions from the LLC. O.C.G.A. Upon the winding up of a Georgia LLC, the assets of the LLC shall be first distributed to creditors of the LLC, either by payment or by making provision for such payment, and then, subject to applicable provisions in the articles of organization or a written operating agreement, any remaining assets shall be distributed to members.

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!

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