So my business partner of 3 years dropped a bomb last week. He wants out of our Kentucky LLC, but we've got two big client contracts that won't wrap until late next year. He's saying he'll just walk and forfeit his share, but I don't think it's that simple. Do I need a lawyer? Can I force him to stay until the jobs are done? Anybody dealt with this in KY? I'm kind of freaking out.
Partner Exit
My Kentucky LLC partner wants to leave but we have unfinished contracts
Not a lawyer but I've seen this movie before. Get an attorney yesterday. If he just 'walks' you could be on the hook for unfinished work and he might still claim his cut later.
What does your operating agreement say about withdrawal? That's the first thing anyone's going to ask.
Lol @ 'forfeit his share.' People say that until their name is on a contract and then suddenly they want their money. Don't let him off the hook verbally.
KY LLC Act default rules are pretty rough for this. Unless your OA says otherwise, a member can dissociate but the LLC might have to buy them out. That could drain your cashh right when you need it for the contracts. Seriously, lawyer.
Curious - are the the contracts in the LLC name or personal? Changes everything.
They're in the LLC name. Both clients are long-term and already paid deposits. I'm just worried I can't finish the work alone and he knows it.
There it is. He knows it. Don't let him use that as leverage to squeeze a better exit.
Have you actually read the operating agreement? Not trying to be snarky, genuinely asking. A lot of these threads go 40 comments before someone finds out there IS no OA.
If there's no OA, the statutory default fills in the gaps and that's usually not what anyone wants. Also if he dissociates he might still be liable for obligations that existed before he left. So 'walk away clean' probably isn't real.
One practical thing: get it in writing that he resigns as an officer/manager, remove his access to accounts, and document everything. Even if you can't force him to finish the work, you can protect the business.
Honestly if he wants out that bad maybe let him go but make him sign a real agreement. Keeping a resentful patrner around to finish contracts sounds like a great way to lose the clients you're trying to save.
This is going to sound cold but: price the buyout against the value of those two contracts, not against what he put in. If the contracts are your lifeline, paying a little to get him out cleanly might beat fighting.