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.