dissolving an L.L.C...best avenue to take?
Our Health Club is being sued by the state A.G. office due to a
recent buy of another health club and the members evidently are
not 'assignable' and funds are to be returned. $7k loss per month.
Our Health Club is struggling due to a recent fire and problems
with obtaining all the insurance proceeds due the L.L.C.
With said two (2) strikes our options (?) are:
a) restructure (...leaving behind some debts)
question: what does that mean?
b) cash call (...investors have yet to see return in 2years)
question: is this even legal or a bogus effort to get more money?
c) sell-out (...and hope to acquire as much as possible)
question: does a buyer indicate that this 'club' is actually a good investment?
sorry for not giving details on monies, but I just wanted more of
a general idea of what these options really mean?
thank you very much
1 Answer from Attorneys
Re: dissolving an L.L.C...best avenue to take?
There are several issues to consider. First, you mention reorganization. This can be done internally by reaching new agreements with the LLC's creditors and investors, or it can be done through the US Bankruptcy Court in a Ch. 11 business reorganization. In either case, you would be wise to consult with an attorney before proceeding. Second, you mention asking the investors for more money. There is nothing illegal or improper with this in and of itself. However, if the business's financial situation is not disclosed or, even worse, misrepresented to potential and/or current investors then there are ethical and legal dilemmas that certainly would arise. It's not unusual for businesses to seek an additional round of funding, if necessary. The manner in which it is done, is the key. Thirdly, you mention a "sell out." I am assuming you are referring to a dissolution of the LLC. Dissolution of the LLC is going to be governed by the terms or the Operating Agreement and the KS statutes, assuming it is a KS LLC. I would recommend that you have an attorney familiar with LLC's review the Operating Agreement prior to proceeding further. If you are in the eastern part of KS, I have handled multiple LLC dissolutions and would be happy to assist you in this regard. Best of luck with your situation.
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