Legal Question in Business Law in Delaware

Resigning as an LLC Member (Delaware LLC)

I am wondering if I can voluntarily resign my membership from an LLC and then compete against that LLC? We have the following language regarding voluntarily resigning our membership:

For a period of one (1) year after the Articles of Organization for the Company are filed (''the filing''), no Member may voluntarily resign his membership in the Company, and no Member shall be entitled to any return of capital from the company, except upon the written consent of all the other Voting Members. During the fourth year after the filing, a Member may voluntarily resign his membership, but such Member shall be entitled to receive from the Company only the book value of his Ownership Interest, adjusted for profits and losses to the date of resignation, unless otherwise agree by written consent of all of the other Voting Members.Subsequent to the fourth year after filing, a Member may voluntarily resign his membership and shall be entitled to receive from the Company the fair market value of his Ownership Interest, adjusted for profits and losses to the data of resignation.


Asked on 8/01/08, 1:25 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Resigning as an LLC Member (Delaware LLC)

As a California lawyer, I don't follow Delaware law except as a mild curiousity, but my strong hunch is that the Chancery Court there would enforce the agreement you're quoting; you might be allowed to resign, but the LLC would have a cause of action against you for any damages it could show as a result of your breaching your contract to remain a member for a longer time.

In sum, you can probably resign, but not without the possibility of liability for breach of an agreement (express or implied) not to do so.

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Answered on 8/02/08, 2:06 am


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