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  1. #1

    Default How Can a LLC Member Oppose Dissolving the Business

    My question involves business law in the state of: CT, MN.
    I'm 20% owner and managing partner of a small LLC with main office in CT. The other 80% owner, an Italian citizen, hired a counsel in FL to dissolve the company. The LLC is incorporated in MN, and is registered in CT as a foreign entity (meaning non-CT entity). The FL counsel sent me an e-mail with a PDF letter reciting the main CT statute articles to take control of the company and dissolve it (34-206, 34-140(d), 34-208 through 34-211).

    1. Is sending an e-mail the legal protocol to go ahead with a dissolution request, and from a different state?
    2. I believe the FL counsel has not done much investigation, doesn't know the company is incorporated in MN, and would not be able to make any progress by filing a dissolution request in CT. Am I correct? I see the the CT Secretary of State has forms to dissolve domestic companies, but doesn't have any form to dissolve a foreign company.
    3. The operating agreement of the LLC states that major decisions require unanimity; one example of a major decision is given as a capital disbursement above $20,000; there is no other example given, but I interpret dissolving of the company as a major event. Both CT and MN LLC statutes established that companies can be dissolved only this is not against the operating agreement. The operating agreement is signed and initialed but written in Italian; is this a problem?

  2. #2
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    Default Re: Opposition to Dissolving a Business

    Quote Quoting gciriani
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    My question involves business law in the state of: CT, MN.
    I'm 20% owner and managing partner of a small LLC with main office in CT. The other 80% owner, an Italian citizen, hired a counsel in FL to dissolve the company. The LLC is incorporated in MN
    LLCs are not corporations so they aren't "incorporated" anywhere.

    You're already exhibiting a severe lack of knowledge.

    Quote Quoting gciriani
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    The FL counsel sent me an e-mail with a PDF letter reciting the main CT statute articles to take control of the company and dissolve it (34-206, 34-140(d), 34-208 through 34-211).

    Is sending an e-mail the legal protocol to go ahead with a dissolution request, and from a different state?
    Yes, it's legal. He can send it by carrier pigeon if he wanted to. You got it.

    Quote Quoting gciriani
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    I believe the FL counsel has not done much investigation, doesn't know the company is incorporated in MN,
    Again, not a corporation, not "incorporated" anywhere.

    Quote Quoting gciriani
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    [*]I believe the FL counsel has not done much investigation, doesn't know the company is incorporated in MN, and would not be able to make any progress by filing a dissolution request in CT. Am I correct?
    Not exactly.

    That the LLC was "formed" in MN only means that there is likely a simple form to be filled out and submitted to MN by the managing member to dissolve or cancel the LLC.

    But in whatever other states that the LLC has authority to operate, it's also a simple matter to make a filing to end that authority.

    Quote Quoting gciriani
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    [*]The operating agreement of the LLC states that major decisions require unanimity; one example of a major decision is given as a capital disbursement above $20,000; there is no other example given, but I interpret dissolving of the company as a major event. Both CT and MN LLC statutes established that companies can be dissolved only this is not against the operating agreement. The operating agreement is signed and initialed but written in Italian; is this a problem?
    Here's the problem. I don't know how you got involved in this or what your stake is but if you believe that the majority member is wrongfully acting against your interests you need to hire your own attorney to represent your interests.

    Fail in that and no amount of complaining, wishing or discussing legal theory on an internet board will stop what's happening.

    By the way, how did you get into this and what is your stake in it?

  3. #3
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    Default Re: How Can a LLC Memper Oppose Dissolving the Business

    Quote Quoting gciriani
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    Is sending an e-mail the legal protocol to go ahead with a dissolution request, and from a different state?
    Read the operating agreement, which should describe how notice is to be given.
    Quote Quoting gciriani
    ...would not be able to make any progress by filing a dissolution request in CT. Am I correct?
    If the LLC was formed and is registered in Minnesota, then its dissolution would be governed by Minnesota law. Connecticut law would govern the continuation or cessation of its registration to do business in that state.
    Quote Quoting gciriani
    The operating agreement of the LLC states that major decisions require unanimity; one example of a major decision is given as a capital disbursement above $20,000; there is no other example given, but I interpret dissolving of the company as a major event.
    What provisions are in the operating agreement, pertaining to dissolution? If the unilateral dissolution of the LLC is not a possibility under the operating agreement, or if there is a specified protocol for the withdrawal of a member that is not being followed, the action you describe would almost certainly be a major event as contemplated by that language. However, nobody can interpret the operating agreement for you without first having the opportunity to read it and, as you were already told, to prevent the dissolution or to seek a remedy through the courts you are going to need to enlist the help of a lawyer.

  4. #4

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

    Quote Quoting Mr. Knowitall
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    Read the operating agreement, which should describe how notice is to be given.
    What provisions are in the operating agreement, pertaining to dissolution? If the unilateral dissolution of the LLC is not a possibility under the operating agreement, or if there is a specified protocol for the withdrawal of a member that is not being followed, the action you describe would almost certainly be a major event as contemplated by that language.
    The operating agreement does not describe how notice should be given. The only provision pertaining dissolution says that in case of dissolution the name of the company will belong to the majority owner.

    Another article states that operating agreement changes have to be approved unanimously.

    The literal translation of the article pertaining major decisions is the following
    Voting rules for decisions by unanimous vote. Important decisions - involving a capital outlay of at least $ 20,000 - must be unanimous, decisions of lesser importance can be taken by a single member.

    Another article states that disputes have to be resolved with mediation. If that doesn't resolve the dispute, then it will go to an arbitrator and resolved according to the rules of the American Arbitration Association.

    - - - Updated - - -

    Adjusterjack, thank you for correcting my language.
    adjusterjack wrote
    By the way, how did you get into this and what is your stake in it?
    I founded the company with the other partner and my stake is 20% of the company.

  5. #5
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    Default Re: How Can a LLC Memper Oppose Dissolving the Business

    Chapter 322B.383 of the Minnesota statutes controls the rights of dissenting LLC members with regard to anything the operating agreement is silent on. So, you need to evaluate what the operating agreement provides and then you need to review what the MN statute (based upon the Model Limited Liability Company Act) provides in this regard, and also what language will control dissolution and winding up. 322B.80 controls dissolution.

    Those are the two sources that will govern all of the issues. If you don't understand what the agreement or statutes mean you will need to consult a business law attorney for advice.

  6. #6
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    Default Re: How Can a LLC Memper Oppose Dissolving the Business

    Quote Quoting gciriani
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    I founded the company with the other partner and my stake is 20% of the company.
    If the guy dissolves the company (or thinks he does) that's not important. What's important is if he empties the bank accounts, sells all the assets and pockets the money while you are "objecting" then the rest of it really doesn't matter, does it?

  7. #7

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

    Quote Quoting Bubba Jimmy
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    Chapter 322B.383 of the Minnesota statutes controls the rights of dissenting LLC members with regard to anything the operating agreement is silent on. So, you need to evaluate what the operating agreement provides and then you need to review what the MN statute (based upon the Model Limited Liability Company Act) provides in this regard, and also what language will control dissolution and winding up. 322B.80 controls dissolution.
    Bubba Jimmy,
    Thank you for bringing up 322B.383 for the rights of dissenting members.
    I had only read through 322B.80, before my OP, and the language* to me seemed clear, that the statute doesn't allow for dissolution, because the operating agreement states unanimity is necessary for major decisions. So I thought that 322B.383 would not even be called in question.

    I see though that there is another article one could think of for dissolution, 322B.833, Judicial Intervention for dissolution, when governors are deadlocked in the management of the affairs. Well, the company has continued to operate for the last 3 years generating enough cash flow to keep going; the only deadlock being the fact that the majority partner would like to wind up the company to operate with his own company.

    However, as adjusterjack put it, because I'm exhibiting a severe lack of knowledge, I don't know if there are other statutes that could turn my argument upside down. Thank you for your time.

    Note*:
    332B.80
    A limited liability company dissolves upon the occurrence of ... an event that terminates the continued membership of a member in the limited liability company, but only if: (A) the articles of organization or a member control agreement specifically provide that the termination causes dissolution and in that event only as provided in the articles or member control agreement;
    - - - Updated - - -

    Quote Quoting adjusterjack
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    If the guy dissolves the company (or thinks he does) that's not important. What's important is if he empties the bank accounts, sells all the assets and pockets the money while you are "objecting" then the rest of it really doesn't matter, does it?
    Although I'm the minority shareholder on paper, I'm the managing partner: I reside in the US, he resides in Italy. Therefore I control the bank account, operations, and I control the 4 trademarks that I filed on behalf of the company during its operation. I also control FDA annual registration that is needed both for our LLC to import products from his company in the US, and that is needed by his Italian company to be allowed to export from Italy to the US. That's why it has been difficult for my majority shareholder to make changes. He offered in the past to take over the business for the rest of the US, and to leave me only CT related business, but I declined, because it would have been a fraction of the whole.

    I'm also trying to understand what the law firm he hired could do to enforce his wishes. I think only a law suit from him would do something. But we are a small business, and the cost of a lawsuit would defeat the purpose, because the cost associated I believe would eat up the assets of the company.

  8. #8
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    Default Re: How Can a LLC Memper Oppose Dissolving the Business

    Quote Quoting gciriani
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    Although I'm the minority shareholder on paper, I'm the managing partner: I reside in the US, he resides in Italy. Therefore I control the bank account, operations, and I control the 4 trademarks that I filed on behalf of the company during its operation. I also control FDA annual registration that is needed both for our LLC to import products from his company in the US, and that is needed by his Italian company to be allowed to export from Italy to the US. That's why it has been difficult for my majority shareholder to make changes. He offered in the past to take over the business for the rest of the US, and to leave me only CT related business, but I declined, because it would have been a fraction of the whole.

    I'm also trying to understand what the law firm he hired could do to enforce his wishes. I think only a law suit from him would do something. But we are a small business, and the cost of a lawsuit would defeat the purpose, because the cost associated I believe would eat up the assets of the company.
    Wait.

    You originally gave the impression that the other member was unilaterally taking steps to dissolve the LLC without your consent and cited statutes allowing him to do so.

    Given your sudden revelation that you appear to be in control, there seems to be some doubt as to what is actually happening.

    You originally wrote:

    "The FL counsel sent me an e-mail with a PDF letter reciting the main CT statute articles to take control of the company and dissolve it"

    I think it's time you revealed exactly what those documents say, word for word, so we can figure out what's really happening.

  9. #9
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    Default Re: How Can a LLC Memper Oppose Dissolving the Business

    Or consult a business attorney. Judicial dissolution is where you're headed anyway.

  10. #10

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

    Quote Quoting adjusterjack
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    You originally gave the impression that the other member was unilaterally taking steps to dissolve the LLC without your consent and cited statutes allowing him to do so. Given your sudden revelation that you appear to be in control, there seems to be some doubt as to what is actually happening.
    Adjusterjack,
    It is as I said: I'm in control of banks, operations etc., but the other shareholder had a legal counsel write me a letter saying that they are relieving me of my duties, and dissolving the company. The following is the significant portion of the letter, with names omitted for privacy:

    This firm has been retained as outside legal counsel to the“Company”. Please be advised that in light of the negative economic and financial results suffered by the Company in recent years, the owner of the majority of the Company’s membership interests has approved the decision to dissolve the Company and wind up its debts and affairs pursuant to the authority granted by the Connecticut Limited Liability Company Act, § 34-206. This letter is also to inform you that pursuant to § 34-140(d) of the Connecticut Limited Liability Company Act, you are being removed as a managing partner of the Company by the affirmative vote of the majority owner of the Company’s membership interests. We understand that you have possession of all of the corporate books and financial documents relating to the Company. Please provide us with a copy of each so that we may dissolve the Company in a manner that satifies (sic) the requirements of the Connecticut Limited Liability Company Act, § 34-208-211. We thank you for your cooperation with this matter.

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