The Importance of an LLC Operating Agreement Upon Dissolution or Dissociation

When the dissolution or dissociation of a business occurs, the LLC operating agreement is of critical importance. If properly crafted, this legal document serves to prevent confusion, disagreements, and exorbitantly expensive litigation. Well-crafted LLC operating agreements establish terms that lay out a road map of sorts for dissociation as well as dissolution. Dissociation refers to the removal of an owner from the company. Dissolution refers to the business's closure.

As long as a business's LLC operating agreement language is not vague and important provisions are explained in-depth, it should be possible to avoid litigation and significant disagreements. This is precisely why a growing number of business owners are leaning on the expertise of seasoned business attorneys to draft LLC operating agreements. The criteria for a LLC's dissociation or dissolution is fairly straightforward. However, courts often rely upon a fact-oriented analysis to decide whether criterion is actually met. Such a fact-sensitive intellectual breakdown of a particular LLC's attempt to dissolute or dissociate has the potential to create conflicts between owners and others who have a vested interest in the finances/future (or lack thereof) of the LLC. These types of time consuming and costly disagreements can often be sidestepped with a comprehensive, detail-oriented LLC operating agreement.

Well-written LLC operating agreements account for the subtle nuances of the particular state LLC Act in which the business is based. The best LLC operating agreements will be written in a manner that accounts for anticipated changes to the law. When in doubt, it is prudent to ally with a savvy business attorney who is capable of composing a LLC operating agreement in a fashion that protects his client's interests regardless of whether the state LLC Act remains static or is amended as time progresses.

If you're looking for to do some business planning and need to consult with business attorneys to ensure you are on the right track to success, contact the skilled team at Fakhouri Law Group today! 

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