Yes, “Breaking Up is Hard to Do”. Especially when your LLC does not have a written operating agreement with a mechanism for expelling a member, and you really want to get rid of that irksome business partner who just won’t see things your way.
Regrettably (or fortunately, depending on your perspective), the Uniform Limited Liability Company Act provides only a few ways to fix a bad member fit:
- expelling the person pursuant to the operating agreement;
- expelling the person by unanimous consent of the other members, only if:
- it is unlawful to carry on with that person as a member; or
- the person has transferred all of the interest in the company, other than as security for a loan or under a judicial charging order; or
- the person is an entity that is about to not exist; or
- only by judicial order, if the person has engaged in wrongful conduct that injures the company, willfully and materially breaches the operating agreement, or makes it not reasonably practicable to carry on with them as a member.
So if you don’t have a written operating agreement, which provides a simple mechanism for expelling a member, then you will end up going to court to get them out.
