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Is it legal to dissolve an LLC without all members approval/agreement?

One of the members of our LLC is not performing according to our verbal agreement. We had an operating agreement, which was not actually signed. There are 3 members of this LLC. Two of the members want to remove the non performing member for lack of performance that put the business at high risk of default with our lenders. Can this LLC be dissolved and another formed with the two performing members without the non performing members' consent to dissolve? Is there a voting process?

1 reply

Jul 18, 2019

Before getting too far along - if there's an operating agreement written, but that operating agreement hasn't actually been put into effect, then it might not be worth the paper it's printed on.

Generally, the process for deciding to dissolve an LLC, and the process for actually winding the business down, will be set out in its incorporation or operating documents. However, under § 14-11-602 of the Georgia Code, it appears that, if there's nothing in the articles of organization or in the written operating agreement for the business, then approval of all members may be required.

It's also worth noting that, regardless of what may or may not be "required", it's generally a bad idea to try and dissolve a business without any input or notice to one of the members of that business, regardless of whether they've failed to uphold their duties. By attempting to dissolve the business without their knowledge, that could certainly give rise to additional disputes.

As yet another consideration, recall that in order to dissolve an LLC, all of the business affairs of that LLC must also be resolved - including any debts or credits. Plus, the division of the LLC's assets must be taken into consideation, too. Note, of course, that there are ways to dissociate or remove members of an LLC. Thus, it may be possible to move forward with an LLC while leaving a prior member behind. Though, the ability to do so may be hampered if there's no operating agreement in effect.

With all of the above being said, in order to decide how to properly move forward with an LLC or how to dissolve that LLC, it would be wise to seek out and consult a local Georgia business attorney. They'll be able to take a deeper dive into the circumstances, documentation, and Georgia's laws on business entities and decide the best path for moving forward.

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