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  1. #31
    Join Date
    Oct 2006
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    15,519

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    Quote Quoting gciriani
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    You are asking good questions. I oppose dissolving the business because my partner is in the process of starting the same business without me. It's possible for him to continue without me, but it's impossible for me to continue the business without his contribution. There are three clauses in the operating agreement that give me some maneuvering space.
    1. As member he is supposed to supply the goods.
    2. A member can't pursue activities in competition with the company.
    3. Major decisions have to be hunanimous.

    There is also the fact in the last three years I provided financial support to the company, gradually increasing my financial stake, and he has completely stopped any financial support; there is an article in the operating agreement stating that if the company needs financial support (capital injection), and one member is not willing to contribute, then the other member is will increase his stake in proportion.

    All this is not clear cut and needs to be argued, because my more recent capital contribution is in the form of forgone paychecks, and part of his early contribution is in the form of goods provided by his company which have not been yet repaid.
    This may sound like a stupid question, but is this product high end hardware for the home?

  2. #32

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    I'm the only person working in it in the US. A portion of the initial goods shipped to the US have not been paid. However, starting with 2012, all goods acquired from the Italian manufacturer have been prepaid. We started at the end of 2006.

    - - - Updated - - -

    Quote Quoting llworking
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    This may sound like a stupid question, but is this product high end hardware for the home?
    It's high end consumer products for sport and health application (physiotherapy).

  3. #33
    Join Date
    Jan 2013
    Posts
    372

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    I'm sorry but if the company began at the end of 2006 and is still struggling financially I don't understand why you do not want to end the company. Did the members unanimously decide to increase your ownership in lieu of salary?
    My advice is to join with your partner in ending this business.

  4. #34
    Join Date
    Oct 2006
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    15,519

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    Quote Quoting DaveM
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    I'm sorry but if the company began at the end of 2006 and is still struggling financially I don't understand why you do not want to end the company. Did the members unanimously decide to increase your ownership in lieu of salary?
    My advice is to join with your partner in ending this business.
    That may be wise, but if the company is struggling financially due to sitting on a large amount of inventory that no one wants, (original inventory not yet paid for in full) it may be that the company is viable and profitable, or at least could be factoring out that inventory, but financially strapped due to that inventory.

    I have seen similar scenarios played out. The Italian partner supplies a large quantity of original inventory based on what they think should be popular, only to discover that the mix is all wrong and the American market wants large quantities of some products, and virtually none of others. So a large quantity of the inventory sits and gets stale.

    Unfortunately Italian banking and accounting regulations work differently than those of the US, making it nearly impossible to bite the bullet on the stale inventory and deal with it properly on the Italian partner's side.

    OP, if I am leaning in the right direction about what is going on here, no matter how viable and potentially profitable the business is, factoring out that stale inventory, your Italian partners are under enormous pressure from their banks and what loosely translates as the "fiscal police" in Italy. Your operating agreement makes it impossible for them to do anything without your agreement, but they WILL tank the business by refusing to ship any more product, and WILL violate the agreement by contacting the larger of your customers and shipping to them directly if they get desperate enough.

    You may be better off negotiating a buyout. They may be willing to buy you out in order to be able to do what they are being pressured to do more rapidly.

  5. #35

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    Quote Quoting llworking
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    You may be better off negotiating a buyout. They may be willing to buy you out in order to be able to do what they are being pressured to do more rapidly.
    I'm sorry LLworkingfor the delay but I had missed your last comment. First I wanted to thank those who contributed, because a couple of weeks ago the Italian partner terminated the legal firm that had written the initial letters. A new development is that he filed an arbitration request stating Company Closing as the nature of the dispute, and $140,000 as the amount of claim.

    Ten days ago I asked for a buyout amount equal to my yearly take home, performance guaranty, times 20 years; the Italian member replied it was blackmailing. Then he filed the request for arbitration. He admitted that he wants to close the company so that somebody else can start the same business, run it better, greatly expand the market and make more money. He found out that he could not do that if the current LLC is around, because the LLC has FDA regulatory access, and owns the IP. He stated that he's not interested in the debt of the inventory the LLC owes to his Italian company (that means he would give it up). To me this means that the LLC has value but that he's not willing to pay up.

    Any suggestion to what present and prepare for the initial arbitration teleconference would be appreciated.

    P.S.: The arbitration demand is dated 9/1/15, the arbitrator received it on 9/2/15; the Italian partner delivered it to me via e-mail only on 9/4/15; shouldn't it have been sent to me at the same time? Is this correct according to the arbitration rules, and if not does it give me some point, showing that my adversary is intent on breaking/bending the rules to his advantage?

  6. #36
    Join Date
    Oct 2006
    Posts
    15,519

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    Quote Quoting gciriani
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    I'm sorry LLworkingfor the delay but I had missed your last comment. First I wanted to thank those who contributed, because a couple of weeks ago the Italian partner terminated the legal firm that had written the initial letters. A new development is that he filed an arbitration request stating Company Closing as the nature of the dispute, and $140,000 as the amount of claim.

    Ten days ago I asked for a buyout amount equal to my yearly take home, performance guaranty, times 20 years; the Italian member replied it was blackmailing. Then he filed the request for arbitration. He admitted that he wants to close the company so that somebody else can start the same business, run it better, greatly expand the market and make more money. He found out that he could not do that if the current LLC is around, because the LLC has FDA regulatory access, and owns the IP. He stated that he's not interested in the debt of the inventory the LLC owes to his Italian company (that means he would give it up). To me this means that the LLC has value but that he's not willing to pay up.

    Any suggestion to what present and prepare for the initial arbitration teleconference would be appreciated.

    P.S.: The arbitration demand is dated 9/1/15, the arbitrator received it on 9/2/15; the Italian partner delivered it to me via e-mail only on 9/4/15; shouldn't it have been sent to me at the same time? Is this correct according to the arbitration rules, and if not does it give me some point, showing that my adversary is intent on breaking/bending the rules to his advantage?
    Does your contract with the Italian company require arbitration? Whether it does or not at this point you really need an attorney.

  7. #37

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    Quote Quoting llworking
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    Does your contract with the Italian company require arbitration?
    The operating agreement of the LLC includes an arbitration clause, which I drafted 9 years ago, and was undersigned by both members. The way I interpret the situation though, since the operating agreement clearly states that the company is to lasts 50 years, and there is no clause in it, on how to close the company, I see points in my favor. There is also a clause that states that if one member is pushed out even for not performing, that member is to retain a minimum 10% of the company.

    The other thing not clear to me is if the $140,000 amount stated in the dispute statement is a request for damage if the company doesn't close, or money the other member is trying to recover in a closing.

  8. #38
    Join Date
    Jan 2013
    Posts
    372

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    It's hard to give advice when the seeker does not provide the information at the start of the discussion. As others have said, you need to find a business attorney to advise you and represent your interests. Give your attorney the operating agreement and whatever other documents you think might be important. After a careful review of the documents you should have a long meeting with your lawyer. Good luck.

  9. #39

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    Quote Quoting DaveM
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    It's hard to give advice when the seeker does not provide the information at the start of the discussion.
    I think I received very good advice so far, and it really helped me fend off a few letters from lawyers from the other party. I have tried to provide as much information as was requested. I wanted to attach documents as the operating agreement and the letters received, but I couldn't find a way to attach documents. Is there such an option, and would you like to see more?

  10. #40
    Join Date
    Jan 2013
    Posts
    372

    Default Re: How Can a LLC Member Oppose Dissolving the Business

    Near the top of the page is a "faq" button which will take you to a search engine. Search the term "attachments".
    I would like to see the company's start-up agreements but do not wait on seeking a lawyer. That's much more important than posting on a forum.

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