Legal Question in Business Law in Iowa

Partnership Dissolution in an LLC

My business partner and I are members of our company Secret Soiree, llc. The LLC is state of Nevada, but we both reside in Iowa and the OPAG is in Iowa. She has left to work with a competing company (I'm glad she has left). We want to dissolve the partnership-but $20G in debts under her personal credit card and a loan from her to the company for $10G so she will not agree to dissolve unless I take responsibility to negotiate a payment of the debts. I do not want to change the name of my company. I do not want to take responsibility for the debt. I have 53% share, she has 42% and another member has 5%. What can I do to remove her from the business, not be responsible for the debts and keep my company name? Can I close the company and restart with the same name but reapply for another TID? Can I and the other member ''vote her out'' and remover her from the LLC? If so, do we still have to pay her debt?


Asked on 1/24/07, 10:38 am

1 Answer from Attorneys
Robert Luedeman solo practitioner

Re: Partnership Dissolution in an LLC

Good questions. So you have a Nevada LLC and your fellow shareholder advanced money on her personal account to the company and won't agree to a dissolution unless you pay her.

An LLC is not a partnership. So there's no having to make good other's debts. If she advanced money to the company without a guarantee that she'd be paid back, there's nothing in the facts you've given me that says you have to pay her off. Perhaps the loan she made has a guarantee to it, that's unknown.

You can let the Nevada LLC go inactive and reincorporate somewhere with a similar name and continue on as usual. Of course you will not be able to strip it bare especially if there are assets involved.

Ultimately, you will have to face the prospect of being sued.

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Answered on 1/24/07, 12:07 pm


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