Expelling LLC members who breach their fiduciary duties

Within a limited liability company, it is not uncommon for disputes to arise among LLC members. Many of these disputes are the result of an LLC member breaching his or her fiduciary duty. When a member does not act in the best interests of the LLC, the effects can be damaging to the company.

What are members to do when the actions of an LLC member threaten the company?

Members may be able to work toward a mutually agreeable resolution to the particular issue. However, it may be in the best interests of the company to expel the rogue LLC member. This can help reduce further damage to the company. But how does that process work? What options are available for members looking to expel another LLC member?

Most operating agreements address the issue of expulsion or disassociation. It is critical to review the operating agreement to find out the protocol for handling this issue. An experienced business attorney can review the operating agreement to determine how to most effectively protect your business' interests.

If the LLC member does not agree to the expulsion, it is advisable to seek assistance from an attorney as the other members can file an action to have a court expel them. An attorney can address any statutory or legal obstacles that may arise during the expulsion process.

Has an LLC member breached his or her fiduciary duties? Do you wish to speak to an attorney to learn about your legal options? Contact Chenoweth Law Group, P.C., for more information about expulsion and/or disassociation, and your company's specific legal options.

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