Breach of Operating Agreement

Subtitle

Limited liability companies are usually controlled by a governing document called an operating agreement. It is important for members of an LLC to follow the operating agreement because the operating agreement outlines the rules and regulations that govern the LLC’s operations, management, and financial dealings. These rules ensure that the LLC operates professionally, efficiently, and legally. If the operating agreement is not followed, it can lead to disputes among members and management which may cause financial loss. Additionally, failing to follow the operating agreement can also put the LLC’s limited liability protection at risk, which can make the members personally liable for any legal issues that arise and can also create liability for managers.

Managers and members of an LLC should do everything they can to resolve any failure to follow an LLC’s operating agreement before resorting to litigation. However, sometimes legal recourse is the only path that will ensure the company is protected from the actions of a rouge manager or member. We develop custom strategies to address those situations where a manager or member of an LLC refuses to follow agreed upon rules and threatens to harm the company. Sometimes a demand letter will resolve the issue, but often litigation is required. This is especially true where distributions or the allocation of resources rises to the level of self-dealing at the expense of the company or other members. We are experienced in dealing with issues arising from a breach of an operating agreement, which may include actions for receivership, declaratory relief, injunctive relief, as well as claims for monetary damages.