Partner walked away without my knowledge

Asked about 1 year ago - Highlands, NJ

I had a llc company with a partner. the operational agreement states that she puts up 20k and advances m the sum of 10k in which I signed a seperate promissory note for it. I also used personal credit cards totalling 16k, we had difficulties getting along as well as some financial difficulties. i walked into the gym one morning and it was completely empty, everything inside had been removed and their was a note on the door stating we were closed effective immediately. The equipment was obviously mine because I paid for it on a credit card, but can she do what she did legally? without notifying me?

Attorney answers (2)

  1. Michael T Millar

    Pro

    Contributor Level 19

    2

    Lawyers agree

    Answered . As a general rule, a member of an LLC has no authority to unilaterally close down the business operations of the company. Under RULLCA (which may not apply), the decision to wind down the company must be unanimous. You likely have a claim against you fellow member.

    If this answer was helpful, please mark it as helpful or as a best answer. This answer is for general education... more
  2. Robert John Murillo

    Contributor Level 19

    3

    Lawyers agree

    Answered . It partially depends on the terms of your agreement. Now, a member can normally always leave an LLC, but the operating agreement should have made clear that doing so is a breach and the LLC or the members can be compensated for that breach. If an attorney drafted your operating agreement, they would usually include that and other relevant terms on breach. It would also include non competition, dispute resolution, and other terms to protect your rights and the business. My operating agreements usually run dozens of pages. I have no idea who wrote yours.

    You also have the separate issue of the business property. You say it is yours. Well, that is not entirely correct unless that was a clause in the operating agreement.. An LLC normally owns the business property. That said, the big issue here is the closing of the business and removal of the property. Again, absent certain terms, that is likely a violation of the agreement, a breach of fiduciary duty, and a claim for damages. Clearly, this member did not talk to an attorney because this is a move that guarantees a lawsuit that she will have a hard time defending.

    In short, you need to hire a local business litigator. The LLC can file for replevin to get the property back (in most states) and then can file civil claims for damages. The replevin, again in most states, is the first step. Good luck.

    This answer is for informational purposes only and is not legal advice regarding your question and does not... more

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