Q: I own an LLC and my partner's breached their fiduciary duties and are demanding assets that will result in layoffs...
I own an LLC (65% share), and my two business partners (35% share - they invested prior to joining as manager-members if that matters) decided to start a competing company while still a manager-member of my company while before it was dissolved. This new company they formed is 100% direct competition to mine and they used trade secrets and IP to form it. They dangled a large ($100K+) investment/loan for our business in front of me, asked me to run revenue projections, and once they saw the potential revenue ($1M+), they deliberately sabotaged our business dealings so they could leave and take the $100K+ investment to start their own business doing the same exact thing. They are now demanding I give them 25% of all assets, which will result in me laying off 13-15 people and losing tens to hundreds of thousands of revenue. There was no formal business agreement signed, nor is there an operating agreement. Edit: They are listed an authorized persons on the Articles of Organization.
A: I’m not sure it is possible to answer this question intelligently due to insufficient facts. How are they member-managers if there’s no operating agreement? And you’re right, fiduciary duty would attach to member-managers. You need to retain a business lawyer to get into the facts in order to provide sound advice.
Terrence H Thorgaard agrees with this answer
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