QUESTION
I am 40% owner of a LLC partenership as a general partner. The other party is 60% owner and Managing Partner. What is my obligation to the business?
Asked on Oct 18th, 2011 on Business Law - Georgia
More details to this question:
My partner has left the country and left the business in a bankruptcy position. I have not worked with the business since helping to get it established in 2009. Now there are creditors calling for payments and the company has no funds. My partner, who was the president and managing member sold the inventory and left the country with the money. I am trying to find out what my rights are as well as what my responsibility is in the matter.
2 ANSWERS
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If an Operating Agreement was signed when the LLC was formed then that document would outline your obligations and responsibilities. Generally, a member of an LLC is not responsible for payment of debts of the LLC. You may have some personal responsibility if you personally guaranteed the debt to the company that supplied the inventory. Assuming you were a passive investor then you should have no liability or obligation to the creditors of the LLC
Answered on Nov 01st, 2011 at 12:56 PM
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As a general matter, a member of a limited liability company is not liable for the debts of the company -- that, after all, is what "limited liability" is all about. You have no duty to pay any debts of the business, unless you personally guaranteed them, and should be entitled simply to walk away if you choose.
You should also make a business determination regarding whether it is worth pursing your missing fellow member. It sounds as if, taking into account the substantial liabilities of the entity, there may have been very little value in the business. If you decide to pursue this, you can engage the services of an attorney to attempt to track down and sue your fellow member. My own experience is that these things rarely have a net positive outcome, but your mileage may vary.
Answered on Oct 22nd, 2011 at 10:46 AM