Legal Question in Business Law in California

Re: How to get out of LLC

If negotiations fail, you can sue for what is called "partition" -- a forced sale and division of assets -- and/or for an "accounting," depending on how the LLC is set up and what, if any, assets there are.

Re: How to get out of LLC

Do you have a copy of your operating agreement? There should be provisions on how to relinquish your shares, buying out other members and/or selling your shares back to the LLC.

Re: How to get out of LLC

By reading your LLC partnership documentation to see what your rights are under the contracts, and then following those procedures. Generally, LLC members have limited ability to demand repayment, but misconduct against you might justify taking action and negotiating a 'resolution' with them. If serious about doing so, feel free to contact me for that legal help.

Re: How to get out of LLC

By reading your LLC partnership documentation to see what your rights are under the contracts, and then following those procedures. Generally, LLC members have limited ability to demand repayment, but misconduct against you might justify taking action and negotiating a 'resolution' with them. If serious about doing so, feel free to contact me for that legal help.

Re: How to get out of LLC

I seriously doubt that an LLC can be partitioned. The partition procedure is suitable for co-owned property and in some cases partnership property, but an LLC is an entity unto itself and dissolution and liquidation by partition is not provided for in either the LLC statutes or the partition statutes. Corporations Code section 17351 provides a comprehensive framework for judicial dissolution of LLCs, including who may apply, appraisal and purchase of interests, and so forth. The section is too long to quote or discuss meaningfully in a lawGuru response. Suffice it to say that this is your way out if you need a court's assistance.

Short of going to court, you have two other possible general avenues to pursue:

1. As Ms. Nguyen suggests, a well-prepared LLC operating agreement may have provisions for a dissident member to be bought out, possibly (but not usually) making such a buyout mandatory by the LLC itself or the other members. The agreement would probably also have a pricing formula, such as independent appraisal or based on the member's capital account. I would guess that fewer than half of LLCs ever formed have adequate provisions in this regard.

2. The other possibility is private negotiations with parties that might want to buy your interest, including the LLC itself, the other members, and strangers. Approach dealing with outsiders carefully; you can transfer your economic interest in the LLC, but not usually your member status. You would also need to make full disclosures to strangers.

Your ability to interest the other members in buying you out might be enhanced by becoming a "squeaky wheel" by exercising your statutory and contractual rights, such as examination of the books and records, holding and attending meetings, etc.

A big factor in any strategy would be whether this is a real business, with cash flow, customers, employees, property, a bookkeeping system, etc., or whether this LLC was formed to operate a business that has never gotten off the ground. If the latter, why bother? Just walk away.

In any case, review whether you have guaranteed any accounts, have signed as the responsible person on any LLC credit cards, etc., or are an officer. If so, resign, withdraw, cancel, etc. as appropriate.

Re: How to get out of LLC

(1) The LLC should have an operating agreement and this may have an "exit strategy" procedure. This is step #1.

(2) If not, its time to evaluate what you want out of the deal. Is this a going concern or do you just want off the liability? This evaluation will strongly influence the next steps.

(3) Try to get an agreement from the other parties. This can be through an attorney or most Better Business Bureau offices provide free mediation services. (See step #2 influencing choices)

(4) Take it to the court.

Particularly in steps #1 & #2, an attorney and/or accountant will provide valuable guidance on what comes next.