Legal ? Re: business (UPDATE)

[ADMIRALSTOCKDALE]

my gf is in an fashion/apparel business with 2 friends. it is an LLC with each having equal ownership, but without assigned officers as far as i know. anyway, the toher 2 girls were best friends before the business started and have started to make moves completely independent of my gf. rumors have spread that the two have even talked publicliy about trying to force my gf out of the businesss. they are trying to justify their position by saying that my gf is disinterested but aside from not being at their beck and call 24/7, they have no leg to stand on here.
my gf has contributed within a couple hundred dollars the same amount of money as the other two, but has had no input to how that mooney is being spent, despite repeated objections. is this illegal? is there a collusion lawsuti or any other type action here?
thanks in advance!!

 

[Zone Read]

If you have an LLC, it was probably (but not definitely) set up by an attorney, which means all sorts of documents such as buy/sell agreements and operating agreements probably (but not definitely) were signed which may tell you what you need to know.

Without seeing those, couldn't even venture a guess as to what the answer is. If you didn't have an attorney set these up, you're going to spend much more than you originally saved by not using one. Biz breakups are similar to divorces and can be as nasty as divorces.

Bottom line, see an attorney.

 

[ADMIRALSTOCKDALE]

yeah, i agreee and told her she needs to. assuming all things are equal, is there anything about their behavior (such as acting alone without consulting gf) that could be illegal?

 

[Drew Shirley]

It's almost impossible to answer your questions definitively without looking at the company's organizational docs, but I can give you some hypothetical answers.

If there is a company agreement, it should specify who the managers are, if any, and how the LLC is to be managed, as well as the duties owed by the managers/members to each other and to the LLC.

If there is no company agreement, then each of the managers would have the ability to bind the LLC and spend money on behalf of the LLC. If there are no managers, then a 2/3 vote of the other two members would be sufficient to carry the day (and actually, a single member can bind the LLC).

If there is no company agreement, however, the members/mamagers probably owe a fiduciary duty to the LLC and the other members/managers. (The statutes don't say).

The only way to know for sure is to have your gf get all the corporate docs and meet with a lawyer.

Let me know if you need a name.

 

[ADMIRALSTOCKDALE]

thanks guys. i know it's a tough question with the partial info. that i've supplied. i'll try to find out more and put it up here if i do. i'll pm for names when i find out more!!

 

[ADMIRALSTOCKDALE]

found out a tad more. there is no company agreement and all three girls are listed as member / owner with the only distinction being that one is the registered agent.
my gf said she heard that the other 2 are trying to "dissolve" her out of the LLC.
i saw this on the SOS site:
§ 101.107. WITHDRAWAL OR EXPULSION OF MEMBER
PROHIBITED. A member of a limited liability company may not
withdraw or be expelled from the company.

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.

 

[Mack Tripper]

I litigate these kinds of lawsuits all the time. In the absence of an operating agreement/bylaws, etc., the default rules are the Texas Business Organizations Code and Texas Limited Liability Company Act (assuiming they are in Texas), which are available online. PM me if you have any other questions.

 

[cbs]

This is about as completely off-topic as you can get, but for MT, I love your sig. There was a house here on 37th street that set their Christmas lights up to be the old Astrodome scoreboard. We were just driving by so I didn't get a real close inspection, but I was in awe of what I saw. Pretty amazing deal.

Back to the topic. Everyone is right that w/o written agreements, the code controls. There are legal answers and then there are practical answers. I don't have any idea about the size of business or investment you're talking about, but when you talk to an atty make sure that you get practical answers about how to resolve this matter.

 

[Drew Shirley]

How valuable is the company? Unless they are making money hand over fist, or they are on pace to do so, it might not be worth suing over.

 

[Drew Shirley]

By the way, this thread should be linked whenever someone makes a "greedy lawyers are too expensive -- why can't I just go to legalzoom for my company formation / will / other crucial legal document?" post.

 

[ADMIRALSTOCKDALE]

drew,
it's not vauable at the moment. it's a boots/handbags/apparel co. that is starting to show some promise.
and i've told her a million times that i can't believe they put so little thought into the fomation and organization of the thing!! she understands now!