Dissolution in an LLC: When It’s Time to Call It Quits

Starting a business is the fruition of one’s hard work and lifetime of efforts. All businesses are entered into with the ultimate goal of turning a profit, and enjoying great success. Unfortunately, many times all businesses, including limited liability companies, or LLCs, hit a roadblock, and are unsuccessful. The most difficult step is accepting that it is time to call it quits on your LLC. Or, in a more common scenario, you realize it is time to cut your losses, but your partners don’t. So how do you get a court-ordered dissolution in an LLC?

Getting a dissolution in an LLC does not require the unanimity of all partners. Certainly, it is the easiest path, but more often than not, at least one partner refuses to acknowledge that it may be the best interest of the LLC. Getting a court-ordered dissolution could resolve the issue. There is no steadfast rule for when a court-ordered dissolution can be had. Rather, a court will look at these situations on a case-by-case basis. The most important factor the court will look toward is whether or not it is still practical to carry on the LLC in lieu of its operating agreement. The petitioning member must establish that the management of the LLC is unable or unwilling to reasonably permit or promote the stated purpose of the LLC, as written out in the operating agreement. A popular scenario is where one partner wishes to undertake a new venture for the LLC that continues the purpose of the LLC, and the other partner refuses to do so. Inversely, a partner may insist on a path that is not in line with the LLC’s purpose. Either way, a deadlock may be resolved by the courts.

Running an LLC is not always smooth sailing. Sometimes, it may be in the best interest of the LLC to call it quits and dissolve. When such a time occurs, you may need to petition the court to grant such a dissolution. Having the right legal team can ensure the proper handling of such an action. Call the Trembly Law Firm, with years of experience handling all your legal business needs, at (305) 431-5678 to schedule a consultation.