Legal Question in Business Law in Illinois

Member Being Removed From LLC
Member is 30% of a 30-30-40 LLC in retail supply biz. 30 & 40 members voted to remove the other member from position of authority within the company. They gave no reason or cause for their decision. They offered a buyout at a substantially low number. Outed partner was blindsided by this and can not get reason for cause, not allowed in the building (clocks changed same day) & unable to get answers. Operating agreement does not mention removal of member. Can ousted member still service customers and enter business? While buyout or disolution discussions aren't taking place, what can this member do? What are his rights?

Asked on 4/15/07, 1:16 pm

2 Answers from Attorneys

Kenneth J. Ashman Ashman Law Offices, LLC

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Re: Member Being Removed From LLC

Unfortunately, what happened to the "outed" member is a relatively common occurrence. I have personally handled four or five of these matters in the recent past, whether as part of a limited liabiliy company or a close corporation, the most recent of which occurred last summer.

Sections 180/35-45, 35-50 and 35-55 of the Illinois Limited Liability Company Act provide the basis for dissociation of a member from a limited liability company, the effect of such dissociation, and the remedy for wrongful dissociation. Included in the events that would lawfully permit dissociation is if the operating agreement provided for same and the conditions therein stated were satisfied.

Thus, it is simply not possible to determine whether the "ousting" of the member was done lawfully or not without reviewing the relevant documents and other facts. Moreover, one must remember that it is possible and, indeed, permissible under certain circumstances to be removed as an employee of an LLC without the membership being effected.

The question posed raises a number of rather complicated and interrelated issues that cannot be addressed fully in this forum.

-- Kenneth J. Ashman; [email protected]; www.AshmanLawOffices.com

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Answered on 4/16/07, 1:08 am

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