Legal Question in Business Law in California

Re: Judgement and Suit, can or should we dissolve?

Without knowing a lot more about the facts and circumstances of the suits and your LLC's situation, it is difficult to provide you with a definitive answer. Accordingly, don't rely solely on the following information; talk to an attorney ASAP if you don't already have one.

I'm thinking your fellow member also posted a question here the other day, so I'm working on the premise that the $20K judgment is in favor of the landlord, and of less import right now than the suit for fraud.

I doubt that dissolution/cancellation is the answer. Like a corporation, an LLC continues to exist after dissolution for the purpose of winding up its affairs, defending lawsuits against it, or, as a matter of fact, being chased by judgment creditors. Dissolving the LLC will not make the lawsuit go away. You would still have to defend the lawsuit against the LLC, with counsel by the way, or risk entry of judgment for the full $2M.

More importantly, especially if you let judgment be entered against the LLC, dissolution will not shield you or your fellow member from any valid claims of personal liability. If the LLC has been sued for fraud, I'd suspect the individual members have been sued for fraud as well. If the plaintiffs have the evidence to prove fraud by the members acting on behalf of the LLC, or to otherwise impose alter-ego liability, whether the LLC is dissolved or not becomes largely irrelevant. They will come after you directly. As an aside, you should probably check with your bankruptcy counsel on whether your filing will shield you from any claim of fraud aimed at you personally.

Just off the cuff, that 998 offer is sounding pretty good. However, that's just a thought, not specific legal advice based on a review of all facts and documents, etc., etc.

Best of luck,

TN

Re: Judgement and Suit, can or should we dissolve?

If you properly filed BK, you should have no horse in the race with these other suits and claims, and your partner needs to make all the decisions to suit his needs. If you didn't properly file and still face liability, then you need to sit down and talk in detail about your risks and remedies to these suits. The LLC can be shut down, regardless of claims, but that doesn't make the claims go away as to the partners. Feel free to contact me if serious about getting consult and advice, and representation if needed.