About David K. Staub Expertise I am a business and tax attorney and have spent more than 30 years assisting people with contracts in a wide variety of business situations. I can answer questions about basic contract issues. My experience includes almost all common contracts including employment agreements, contracts for the purchase and sale of a business, shareholder agreements, partnership agreements, LLC operating agreements, leases, software development agreements, distribution agreements, franchise agreements, joint venture agreements and software license agreements, to name a few. I can also direct people to sources for answers to specific legal questions which cannot be answered in a forum of this nature.
Experience
Experience in the area I have been an Illinois business attorney for almost 30 years. I have an extensive practice in the mergers and acquisitions area and have been involved in the tax and legal issues on hundreds of business transactions.
Organizations Illinois State Bar Association;
Chicago Bar Association (former Chairman of the Corporation & Business Law Committee and former Chairman of the Mergers and Acquisitions Subcommittee; former Executive Committee member, Federal Tax Committee and Chairman of subcommittee on general tax issues); Glenkirk Foundation (Trustee; Vice-Chairman/Strategic Planning); Association for Corporate Growth, Chicago Chapter; Midwest Entrepreneur Forum; Midwest Association of Alpha Delta Phi - President
Publications Commerce Magazine; YLS Journal; ISBA Section of Taxation Newsletter
Education/Credentials Harvard Law School, J.D., 1977; University of Illinois, B.S. in Accounting, with highest honors, 1974
Disclaimer Responses are intended to be informational only. No response is intended to constitute legal advice or create an attorney-client relationship. Online advice is not a substitute for consultation with an attorney.
Question How to get out of an LLC partnership 50-50 voting, when the other partner wont sign off(partner "Sour"). The partner that will not sign has a capital account of negative $305,000. The bank will Loan us $40,000 to keep us going but partner "Sour" wont sign the loan. In the last 2 years partner "Sour" has received distributions of greater than $60,000 compared to Partner "A". Please let me know if you need more info to make an expert answer on this matter.
Answer Wade,
This question depends on your state law and on your LLC operating agreement.
Hopefully you have an LLC operating agreement that deals with this issue. Dealing with an exit strategy in the event of death, disagreement or deadlock is one of the most critical issues that should be handled at the time the LLC is formed. Unfortunately, many LLCs fail to prepare an operating agreement. Many of those that do have operating agreements are do-it-yourself jobs or LLC-in-a-kit forms that fail to adequately consider the fact that different situations require different solutions.
If your operating agreement doesn't answer the question, you need to look at your own state's LLC act. Most of the state laws provide for judicial dissolution in the event that the LLC cannot continue to function. Unfortunately, that tends to be a slow and expensive way to resolve a dispute.
With respect to the excess distributions to "Sour", there may also be
a way to recover those. State LLC acts differ on how distributions are made and what rights to an accounting you may have.
For an answer that is more specific to your own facts, including your own operating agreement and your state law, you should talk to a good business attorney who is familiar with LLC issues.
