Sycamore, IL asked in Business Law for Illinois

Q: An LLC was formed in one state then dissolved. Later, the same principals formed a new LLC with the same product in

another state. The original charter was to develop and market the product.

All of the investors' money was used for product development which was not completed. The second corp. as revealed in their recent patent application, is building on the previous corp's design.

Are the investors of the first LLC (appx 15) entitled to equity in the second LLC?

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1 Lawyer Answer
Cynthia Rote
Cynthia Rote
PREMIUM
Answered
  • Rockton, IL
  • Licensed in Illinois

A: This depends on how the LLC was dissolved. If it was done correctly through an Assignment for the Benefit of Creditors or through the proper dissolution process the LLC and its owners may have protected themselves. However, if they did not assign a value to the intellectual property at dissolution and did not correctly dissolve there may be issues for the investors to exploit.

Unfortunately, it is impossible to answer this question without seeing the relevant LLC documents and investor agreements.

*This response is for general purposes only and does not establish an attorney-client relationship, nor should it be considered legal advice.

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