Three of us started a small LLC in Maine last year (a bakery). One member moved out of state and basically ghosted us. She still owns her share but won't respond to emails or sign anything. What can we legally do if she just stops participating? Do we have to dissolve? Can we vote her out? I'm worried we can't even open a new bank account without her signature. Any Maine-specific advice would be great. We never made an operating agreement 🤦
LLC Member
What happens if one member of my Maine LLC stops participating?
No operating agreement is the real problem here. Maine's default LLC act will fill in the gaps, but it usually requires unanimous member consent for major stuff. You might be stuck unless you go to court.
Bakery? Just tell her you're changing the name to 'Ghosted Goods' and see if she surfaces.
I'm not a lawyer, but I've been through something similar. If she's not participating, you may be Able to file a statement of authority or use a court-appointed receiver. But honestly, without an operating agreement, you're looking at a potential judicial dissolution. That's expensive.
What does your LLC certificate of formation say? Maine doesn't require an operating agreement, but if it says members manage the LLC, then yeah, she's still a manager even if she's MIA.
I'm the 'ghost' in my own LLC. I moved away and stopped going to meetings because the other two kept making decisions without me. Maybe she feels pushed out? Just a thought. Have you tried calling instead of emailing?
^^ this is why you always do an operating agreement. Even a one-pager. But to answer your question: in Maine, you can potentially remove a member if the other members unanimously agree AND the operating agreement allows it. Without one, it's murky. You might need her to voluntarily withdraw.
Could you buy her out? Send a certified letter with an offer, even if it's low. If she doesn't respond, that's evidence she's abandoned her interest. Courts might consider that.
Also check Maine's 'abandonment' rules. If a member abandons their interest, the LLC can continue. But 'abandonment' isn't clearly defined. You might need a lawyer to argue it.
I'd also look at whether she's still receiving distributions. If she is, she's not really abandoning. Stop paying her and see what happens.
Stop paying her? That could be seen as oppression. Maybe just hold her share in escrow.
We haven't been paying distributions because we're reinvesting. She hasn't asked for money. But she also won't sign the new lease. Our landlord is getting nervous. I'll look into the judicial dissolution route but really hoping to avoid lawyers
Avoiding lawyers now usually means paying them more later. Sorry. But maybe a mediator could help. Maine has a small business mediation program.
I still say pick up the phone. Ghosts usually have a reason they stopped answering. Or they're just jerks. Either way, you'll know.