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Ask Law Educator, Esq. Your Own Question
Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 118780
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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My partner has just requested a capital call requesting I

Customer Question

My partner has just requested a capital call requesting I put in $8000 per Section 3.2 in the Amended & Restated Operating Agreement for Laurnika Designs LLC (attached). I do not agree that this money is needed in the company right now, nor do I wish to
put in this money. My questions are: 1. Can the company be forced to dissolve? ----- If so, do I personally owe any money to Laura? 2. Can I lose my share or have my share reduced by not responding to the capital call? 3. What other ramifications does not
complying with the capital call have? Thank you - Nik Valcic
Submitted: 2 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 2 years ago.

Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

According to your agreement, you are bound to make the contribution and your failure to do so results in you losing your rights in the LLC, including voting rights. This would not be a basis for you to force the company to dissolve. The other member who pays the capital increase and puts up your share can actually pursue you in court for breach of contract and seek damages and attorney's fees from you and can get you to reimburse them for putting up the share of money you should have put up.

The money is owed back to Laura if she puts it up into the company as the agreement specifies she would do.

You lose your right to vote, you also can be sued for any damages your failure to put money up causes the company and also for attorney's fees and costs if the company has to sue you to get the money.

If you dispute the need for the money you can file a suit yourself against the company called a declaratory judgment action, which is where evidence would be put before the court regarding need and the court would decide if the call would be in compliance with the contract you signed and agreed upon.

Customer: replied 2 years ago.
Thank you! This is awesome. I realize this is getting in deep so if we owe more money for this please let me know how to handle that. For the record Nik designed a laptop bag that is just recently available for sale - Laura owns half of the patent and he created the LLC with her as a partner.Laura has made it known if Nik doesn't put up his half of the capital call she wants to dissolve the LLC. Is she able to do that?In that case, what does Nik owe Laura for the $ she invested since day 1? As far as we can tell the contract says the company pays her back from profits but we aren't really clear on that.If the company dissolves what happens to the registered trademark that was give to the LLC?Thank you.
Expert:  Law Educator, Esq. replied 2 years ago.

Thank you for your reply.

If the partners cannot resolve their dispute and cannot mediate a resolution and continue to disagree over management of the company, then it is possible that the dissolution would take place, but in the agreement section 5.4 I believe it says that it requires a unanimous vote of the members to dissolve. If Nik did not put up money, then Nik would not have a right to vote on dissolution and that means Laura could vote to dissolve.

If the company dissolves then the trademark or patent is an asset that would have to be divided by the owners of the company or sold off with any of the other assets.

Nik could be sued for causing harm to the company for not putting up the money or she can take it from her share of the assets and Nik would get less of the assets if they do dissolve the company

Expert:  Law Educator, Esq. replied 2 years ago.

Thank you for your reply.

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