Can the managing partner of an LLC force other members to pay the debt of the LLC?

2 views 5 answers
I wish to depart the LLC and want to sell my interest to another partner. Will the purchasing partner assume my liability (if any) for the LLC's debt?

Attorney Answers

5
Michael Doland ·
It's an unusal question. The debt of an LLC is nor normally the debt of a Member. It appears not, but one would have to know a lot more about the details to give a better analysis.
0 upvotes
Justin Lowenthal ·
Generally speaking, you, as an LLC member, are not personally liable for the LLC's debt. However, operating agreements often detail whether you have an obligation to contribute additional capital or not. If the LLC's operating agreement does somehow require that you contribute additional capital, your buy-sell or purchase agreement with the purchasing member should (or should have) detail(ed) whether you or he/she would be responsible for the additional capital contributions, if any. Since the debt belongs to the LLC, I think you may be a bit confused about the situation, which is why I suggest that you consult with an attorney before making any decision. If you question is in fact as simple as it is written - "Will the purchasing partner assume my liability (if any) for the LLC's debt" - then the answer is, "no, unless the agreement you have with the purchaser expressly states that he/she does." Nevertheless, I do not believe you would be responsible for any debts of the LLC, so it is moot.
0 upvotes
Linscott Hanson ·
The purchaser of your interest will not AUTOMATICALLY become responsible for you liability. If your bargaining for the sale of your interest, you can include the buyer's willingness to assume your liability as a part of the negotiations. BUT even if the buyer is willing to assume your indebtedness, and to indemnify you against any loss on account of it, its ultimately up to your creditor to either accept the transfer to the buyer or not. If you can get the creditor to agree, then you can feel comfortable that you have gotten rid of the liability, otherwise there is still some reason for concern, as you are depending on the buyer's promise. The operating agreement of the LLC may contain language the assists you or not, and you need to have that reviewedf by an attorney in the jurisdiction where the company is domestic.
0 upvotes
Robert A. StumpfBankruptcy AttorneyStaten Island, NY ·
I wouldn't use the word "force" in your scenario, I assume the purchasing partner would purchase your interest subject to any liabilities charged against it.
0 upvotes
Ronald Coleman ·
You should consult with an attorney and take a copy of the LLC operating agreement with you as it will assist the attorney in being able to fully address the issues you raise. The LLC operating agreement is very important to your situation. On the debt issue, if you do sell to the other member, not the manager, make sure you get a written indemnity agreement from the purchaser since the sale will not automatically require the purchaser to assume your debt, if there is really a debt, which can only be answered after the nature of the debt and th terms of the operating agreement are known.
0 upvotes