Legal Question in Bankruptcy in Connecticut

Can a member put the LLC into bankruptcy to pay a self-serving debt?

My LLC co-member is threatening to take the LLC to bankruptcy if I do not consent to handing over all my intellectual property contributions and sign away my rights.

Right now, my partner is refusing to provide me with expense and creditor information to support this threat but it is my strong suspicion that the only creditor the LLC could have right now is her own husband. Lately, her husband (a non-member) has gotten in on the strong-arming by threatening to take things to bankruptcy and thus sell off my intellectual property - presumably to him.

Their assertions over the past couple days have been that I should give them full rights to all the products and intellectual property I brought to the company in order for them to "enjoy the possibility of recovering debts." In exchange, I would be given back the right to use my intellectual property in non-competing markets. So the ability of the company to move forward has been clearly stated and they seem to be relying on my fear of the sale of my products and intellectual property in bankruptcy to prompt my agreement to their "offer." I have offered in the past to attempt to repay my partner's expenses out-of-pocket in exchange for going our separate ways but this has been summarily dismissed, only to be replaced by a sob story about how they "have to" incur tens of thousands of dollars in costs to attempt to recoup these expenses in a considerably more risky way so their true intent to take my products and company for themselves is rather clear.

That said, I guess my question is whether my partner could unilaterally pursue bankruptcy instead of the other existing options, for the thinly-veiled purpose of selling all assets to her own husband as repayment of a minimal token "debt."

Asked on 2/01/12, 8:57 am

1 Answer from Attorneys

Charles Andersen Charles Andersen, Atty

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Answered on 2/01/12, 11:22 am

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