Member Who Withdraws from LLC Entitled to Return of Original Investment
Description Wyoming supreme court held that a member of an LLC who withdrew from the company was entitled to a return of his original investment. As to his claim that he is owed the current market value of his ownership share in the LLC, the trial court must gather more testimony to determine what the parties intended since the LLC statute does not address the issue.
Topic Business Organization
Key Words LLC; Members; Capital; Withdrawal
C A S E   S U M M A R Y
Facts Lieberman and others created Wyoming.com LLC in 1994. The initial capital was $50,000, of which Lieberman contributed $20,000 for a 40% ownership interest. The Articles of Organization were amended in 1995 to reflect an increase in capitalization to $100,000; the additional funds coming from new members, but Lieberman's share remained at 40%. In 1998, Lieberman was fired as vice president of Wyoming.com and was forced to leave the premises. He withdrew from the company and demanded the return of his share of the current value of the company, which he estimated to be $400,000 for his 40%. His withdrawal was approved but he was only offered his original $20,000 back, which he refused. The district court held that he was only due $20,000; he appealed.
Decision Affirmed in part. The LLC need not be dissolved due to Lieberman's withdrawal. He is entitled to the return of his capital contribution of $20,000, which has been offered. His contention that he should get the fair market value of his interest in the LLC is less clear. The statute authorizing LLC's does not address the issue, it only addresses return of original contributions. What is not clear is what happened to Lieberman's 40% interest. His withdrawal from the LLC does not necessarily mean he has forfeited that; one looks to the LLC's operating agreement. It states that a member's interest is represented by membership certificates. There is no indication that interest was cancelled or forfeited. Hence, the district court should resolve that issue.
Citation Lieberman v. Wyoming.com LLC, 2000 WL 1357716 (Sup. Ct., Wyo., 2000)

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