How Do I Remove a Member of a LLC or Dissolve the LLC in Tennesssee?

Full question:

I own a small LLC company here in Chattanooga, Tn. My wife is part owner. It basically is a 50 % deal. We are going thru a nasty divorce and she is really causing me to loose a lot of my regular customers. She will not give me the computer with my customer base on it and my accounting. I am now going on 4 months behind in my accounting and am starting into my busy season. How can I dissolve this company or get her out of it. She did the accounting for up it until about 2 years ago. I am the one that keeps this company afloat. I actually do the work at the customers home. Without me there is no company. If I just quit working in the field, there is no income. Can you help me? I formed the company in 1987 We turned it into an LLC in 2000. I have built my company for the last 21 years with honesty and a good reputation. She is out to destroy me.

• Category: LLC
• Date: 04/07/2025
• State: Tennessee

Answer:

The requirements will depend on the terms of the operating agreement and the facts involved. It may be necessary to amend the articles of organization, a buy-sell agreement is often recommended, and there may be promissory notes or other documents required.

The operating agreement governs the requirements and processes for your particular LLC when it comes to termination of a membership in the LLC or dissolution. Typically, a vote of the members will be required to terminate a membership and so a certain percentage of the current LLC members must approve. All termination or buyout requirements set forth in the LLC operating agreement or buy-sell agreement should be met.

Please see the following TN statutes to determine applicability:

48-216-101. Termination of membership interest.

(a) MEMBER'S POWER TO TERMINATE MEMBERSHIP. If an LLC formed prior to
July 1, 1999, has, pursuant to § 48-245-101 (c)(1), eliminated as
events of dissolution all of the events enumerated in § 48-245-101
(a)(5)(A)-(J), unless otherwise provided by the articles or operating
agreement, no member shall have the power or right to perform an event
enumerated in § 48-245-101 (a)(5)(B), (C), or (J) or the right to
perform an event enumerated in § 48-245-101 (a)(5)(G) or (H). Except
as provided above, a member always has the power, though not necessarily
the right, to terminate membership by withdrawing at any time. Unless
otherwise provided in chapters 201-248 of this title, the articles,
operating agreement, or the events enumerated in § 48-245-101
(a)(5)(A), (D), (E) and (I), any other withdrawal or termination shall be
deemed wrongful.

(b) WHEN EXPULSION PERMITTED. Unless otherwise provided in the
articles, a member may not be expelled.

(c) EFFECT OF TERMINATION OF MEMBERSHIP ON THE GOVERNANCE RIGHTS OF THE
TERMINATED MEMBER. If, for any reason, the continued membership of a
member is terminated:

(1) If the existence and business of the LLC is continued, then the
member whose membership has terminated loses all governance rights and
will be considered merely an assignee of the financial rights owned
before the termination of membership; and

(2) Unless the articles or operating agreement provide otherwise, if
the existence and business of the LLC is not continued, the member whose
continued membership has terminated, except through wrongful withdrawal
or wrongful termination, retains all governance rights owned before the
termination of the membership and may exercise those rights through the
winding up and termination of the LLC.

(d) ADDITIONAL EFFECTS IF TERMINATION OF MEMBERSHIP IS WRONGFUL. If a
member withdraws in contravention of the articles or an operating
agreement then:

(1) The member who has wrongfully withdrawn forfeits governance
rights in the winding up and termination process or in the continued
business; and

(2) The member who has wrongfully withdrawn is liable to all the
other members and to the LLC to the extent damaged, including the loss of
foregone profits, by the wrongful withdrawal. Such damages may be offset
against any amount to be paid to the wrongfully withdrawing or
terminating member by the LLC.

(3) [Deleted by 1999 amendment.]

(e) VALUE IF LLC IS CONTINUED. If the business and existence of the LLC
are continued, any withdrawing or terminating member, whether such
withdrawal or termination was wrongful or otherwise, is entitled to
receive, subject to the provisions of subsection (d) above, the lesser of
the fair market value of the withdrawing or terminating member's interest
determined on a going concern basis or the fair market value of the
withdrawing member's interest determined on a liquidation basis.

(f) VALUE IF LLC TERMINATES. Except as provided in subsection (d), if
the business and existence of the LLC are not continued, then any
withdrawing or terminating member, whether such withdrawal or termination
was wrongful or otherwise, is entitled to receive that member's
distribution under § 48-245-1101.

(g) TERMS OF PAYMENT. Except as provided in the articles or operating
agreement, any amount to which a withdrawing or terminating member is
entitled under subsection (e) or (f) shall be paid to such withdrawing or
terminating member within six (6) months of the determination of such
amount.

(h) MODIFICATION BY ARTICLES OR OPERATING AGREEMENT. Notwithstanding
other provisions in this section, the articles or operating agreement may
establish the amount to be paid a withdrawing or terminating member or a
method for establishing such amount and may also establish the terms of
payment of such amount. Such established amount, or the method of
determining such amount, and such established terms of payment shall
control.

48-241-107. Removal of a manager.

(a) Unless otherwise provided in the articles or operating
agreement, if the LLC is board-managed:

(1) A manager serves at the pleasure of the board of
governors;

(2) The board of governors may remove a manager at any time
with or without cause; and

(3) The board of governors may eliminate any manager position
other than chief manager or secretary at any time;

(b) Unless otherwise provided in the articles or operating
agreement, if the LLC is member-managed:

(1) A manager serves at the pleasure of the members;

(2) The members may remove a manager at any time with or
without cause; and

(3) The members may eliminate any manager position other than
chief manager or secretary at any time.

(c) The removal of a manager under subsection (a) or (b) is
without prejudice to the contractual rights of the manager, if
any.

48-245-101. Dissolution.

(a) DISSOLUTION EVENTS. Except as stated in subsection (b) or (c), an
LLC is dissolved upon the occurrence of any of the following events:

(1) If a period is fixed in the articles for the duration of
the LLC, upon the expiration of that period;

(2) By action of the organizers pursuant to § 48-245-201 or by
the members pursuant to § 48-245-202, or upon the occurrence of an
event specified in the articles or operating agreement;

(3) By order of a court pursuant to § 48-245-901 and
§ 48-245-902;

(4) By action of the secretary of state pursuant to § 48-245-302;

(5) Except as provided in § 48-245-101(a)(6) for LLCs created
prior to July 1, 1999, upon the occurrence of any of the following
events, unless the articles or operating agreement provide that one or
more of the following events will not constitute an event of
dissolution:

(A) Death of any member;

(B) Retirement from membership of any member;

(C) Resignation or other withdrawal of any member;

(D) Acquisition of a member's complete membership interest
by the LLC;

(E) Assignment of a member's governance rights under
§ 48-218-102 which leaves the assignor with no governance rights;

(F) Expulsion of any member if expulsion is permitted by the
articles;

(G) Bankruptcy of any member;

(H) Dissolution of any member;

(I) Insanity of any member; or

(J) The occurrence of any other event that terminates the continued
membership of a member in the LLC.

(K) [Deleted by 1999 amendment.]

(6) For LLCs formed on or after July 1, 1999, or for LLCs formed
prior to July 1, 1999, that elect by providing in their articles for the
amendments by Acts 1999, ch. 455, regarding dissolution events to apply
to such LLC, the LLC shall be dissolved upon the occurrence of:

(A) In accordance with § 48-245-202 or any event specified in
the articles or operating agreement including, but not limited to, events
of withdrawal by a member or action or procedure as set forth in the
articles or operating agreement; or

(B) A merger in which the LLC is not the surviving organization.

(b) Notwithstanding subdivisions (a)(5)(A)-(K), including if and as
modified by subsection (c), the LLC is not dissolved and is not required
to be wound up by reason of any event that terminates the continued
membership of a member if there is at least one (1) remaining member and
the existence and business of the LLC are continued by the consent of a
majority vote of the remaining members or such greater vote of the
remaining members as provided in the articles. Such consent must be
obtained no later than ninety (90) days after the dissolution event. The
granting of consent is at the discretion of each member and may be
unreasonably withheld.

(1) [Deleted by 1999 amendment.]

(2) [Deleted by 1999 amendment.]

(c) REDUCTION OR ELIMINATION OF DISSOLUTION EVENTS. (1) With respect to
LLCs created prior to July 1, 1999, the articles or operating agreement
may specify that none or less than all of the events listed in
subdivisions (a)(5)(A)-(J) constitute dissolution event(s).

(2) With respect to LLCs created prior to July 1, 1999, and which do
not elect under § 48-245-101(a)(6) to have the amendments by Acts
1999, ch. 455, regarding dissolution events apply, the articles or the
operating agreement of a board-managed LLC may provide that the events of
dissolution enumerated in subdivisions (a)(5)(A)-(J) may be limited to
one (1) or more events that are applicable only to one (1) or more
members.

(d) PROCEDURES FOLLOWING DISSOLUTION. An LLC dissolved by one (1) of
the dissolution events specified in subsection (a), as modified by
subsection (c) if applicable, unless subsection (b) applies, must be
wound up and terminated as provided in this chapter.

48-245-201. Nonjudicial termination by organizers.

(a) MANNER. An LLC that has not accepted contributions may be
dissolved and terminated by the organizers in the manner set
forth in this section.

(b) ARTICLES OF TERMINATION. A majority of the organizers
shall sign and file with the secretary of state articles of
termination containing:

(1) The name of the LLC;

(2) The date of organization;

(3) A statement that contributions have not been accepted;

(4) A statement that no debts remain unpaid.

(c) EFFECTIVE DATE. When the articles of termination have
been filed with the secretary of state, the LLC is terminated.

48-245-202. Nonjudicial dissolution by members.

(a) MANNER. An LLC may be dissolved by the members:

(1) Upon any event of dissolution set forth in the articles,
operating agreement, or the Tennessee Limited Liability Company Act,
compiled in chapters 201-248 of this title, requiring member action;

(2) By any procedures set forth in the articles or operating
agreement; or

(3) By the members when authorized in the manner set forth in
this section.

(b) NOTICE AND APPROVAL. (1) The proposed dissolution must be submitted
for approval at a meeting of members. Written notice shall be given to
each member, whether or not entitled to vote at a meeting of members,
within the time and in the manner provided in § 48-222-101 for
meetings of members, and whether the meeting is a regular or a special
meeting, must state that a purpose of the meeting is to consider
dissolving the LLC and that dissolution must be followed by the winding
up and termination of the LLC.

(2) If the proposed dissolution is approved at a meeting by a
majority vote or such greater vote as may be provided for in the
articles or operating agreement, the LLC must be dissolved and notice of
dissolution shall be filed with the office of the secretary of state
pursuant to § 48-245-401.

48-245-901. Judicial intervention and dissolution.

A court may grant any equitable relief it considers just and
reasonable in the circumstances or may dissolve an LLC and/or
direct that the dissolved entity be merged into another or new
LLC or other entity on the terms and conditions the court deems
equitable.

48-245-902. Judicial dissolution.

(a) On application by the attorney general and reporter or by
or for a member, the court may decree dissolution of an LLC
whenever it is not reasonably practicable to carry on the
business in conformity with the articles and/or the operating
agreement.

(b) The dissolution is effective upon the decree of
dissolution becoming final and non-appealable. Such decree
shall be filed with the office of the secretary of state.