July 25, 2016

It’s Not Me, It’s You: Planning for Expulsion of Members from LLCs

Written By

Thomas E. Rutledge
Member, Stoll Keenon Ogden PLLC

It is lamented that half of all marriages end in divorce. To this lament there is the only partially tongue-in-cheek response that “yes, but the other half end in death.” Business relationships are no different—at some point, either the reality of the actuarial tables or a disagreement as to how to proceed forward will necessitate a restructuring of the relationship.

Nobody, at the inception of a venture, wants to plan for the break-down in the interpersonal relationship that is often at the core of the business plan. Perhaps not wanting to “jinx” the new venture, participants avoid discussing the possibility of one day needing to expel one of the owners. That planning is, however, crucial, and counsel needs to consider and draft for that potentiality.1

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