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Recent Cases: Ousted minority member of LLC recovers $1 million for his membership interest |
In 2002, the Defendant loaned $5 million to the LLC, and in exchange received a Promissory Note from the LLC, a personal guarantee from the two minority owners, and a majority ownership interest in the LLC. In 2004, the majority owner suddenly fired the Plaintiff minority member. Shortly thereafter, the majority owner made demand on the other minority owner for payment of the $5 million loan balance pursuant to his personal guarantee. Unable to pay $5 million in cash, the other minority owner agreed to transfer his 26% ownership interest in the LLC to the majority owner. In exchange for transferring his ownership interest, he was released from his personal guarantee on the loan. However, the majority owner did not eliminate or reduce the loan balance at all to account for his receipt of the 26% ownership interest. Rather, he then made demand on the Plaintiff to pay the entire $5 million loan balance pursuant to his personal guarantee. Rather than transfer his ownership interest in the LLC to Defendant, Plaintiff filed this action, alleging that his co-guarantor’s 26% interest in the LLC was worth more than $5 million and thus, he transferred that interest to Defendant in full satisfaction of the loan. Defendant counterclaimed for $5 million on the loan pursuant to Plaintiff’s personal guarantee. In a settlement, the Defendant agreed to release Plaintiff from his $5 million guarantee and to buy Plaintiff’s minority interest for $1 million. The case was handled by Ed Dovin and Allison Ficken. |
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