Does duty of loyalty to my LLC end immediately under judicial dissolution?

UPDATED: Sep 30, 2022

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Does duty of loyalty to my LLC end immediately under judicial dissolution?

Hello. I’m a 50 member of a member-managed LLC in California. I recently went to court with my 50 partner and won a claim for judicial dissolution. We are about to undergo a court managed dissolution. I’m interested in getting my new company up and running ASAP. Are my duties of loyalty to refrain from competing, specifically to my current LLC immediately gone as soon as a CA Superior Court house awards me a decree of judicial dissolution? Or do I have to wait until the company has been completely liquidated? I would really like to get my new company up and running while the old company is being dissolved. Thanks

Asked on December 21, 2016 under Business Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

Your duty of loyalty lasts as long as the company lasts; and while there is a decree of dissolution, it has not been dissolved yet. You need to wait until the dissolution actually occurs to be free from your duties to the LLC (and through it, to other members).

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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