[CLBS] Breach of LLC Operating agreement - before BK or by filing BK - any difference?

[Holly Roark]

According to an LLC operating agreement, a member resigning is a breach, but
so is filing BK. Is there any difference in liability if one breaches by
resigning prepetition as opposed to breaching by filing BK? I understand
there may be nondischargeable claims of breach of fiduciary duty, however in
this particular case that is unlikely. I am wondering if there are any
non-obvious traps regarding timing here since the other member would like
client to go ahead and sign a resignation prior to filing the BK. 

 

A breach does trigger a requirement to return all "units" of interest for
mandatory redemption (valued at zero). I don't think a chapter 7 trustee
would find any value in the debtor member's interest. 

 

 

Best regards,

HOLLY ROARK

Attorney at Law 

Certified Bankruptcy Specialist -

By the State Bar of California Board of Legal Specialization

 

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