The Michigan Limited Liability Company Act, specifically MCL 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When an LLC is formed, its members typically contribute capital, property, or services in exchange for an ownership interest. The initial valuation of these contributions is crucial for establishing the members’ respective capital accounts and their share of profits, losses, and distributions. The Act requires that the operating agreement detail how contributions are to be made and how profits and losses are to be allocated. If an operating agreement is silent on the allocation of profits and losses, the Act provides default rules. However, for the purpose of determining the initial ownership percentages and the basis for future allocations, the agreed-upon value of the initial contributions is paramount. For instance, if Member A contributes \( \$10,000 \) in cash and Member B contributes property valued at \( \$20,000 \), and these are the only initial contributions, Member A would have an initial ownership interest reflecting \( \frac{\$10,000}{\$10,000 + \$20,000} = \frac{10,000}{30,000} = \frac{1}{3} \) of the LLC, and Member B would have \( \frac{\$20,000}{\$30,000} = \frac{2}{3} \) of the LLC. This initial allocation is not based on the total value of the LLC after formation, but rather on the relative value of the contributions made at the time of formation. The subsequent appreciation or depreciation of the LLC’s assets, or further contributions, will affect future allocations as detailed in the operating agreement or by statute.

The Michigan Limited Liability Company Act, specifically MCLS § 450.4101 et seq., governs the formation and operation of LLCs in Michigan. A fundamental aspect of LLC law relates to the authority of members and managers to bind the LLC. In a member-managed LLC, every member is an agent of the LLC for the purpose of its business, and any matter relating to the business of the LLC in the ordinary course of its business is decided by the majority of the members. However, this agency authority is generally limited to actions taken in the ordinary course of business. Extraordinary actions, such as the sale of substantially all of the LLC’s assets, typically require a higher threshold of approval, often a supermajority vote or unanimous consent, as stipulated in the operating agreement or, in its absence, by the Act itself. The Act generally presumes member-management unless the articles of organization specify otherwise. When an LLC is member-managed, the members collectively hold the power to conduct the LLC’s business. The sale of substantially all of the assets is a significant transaction that goes beyond the ordinary course of business for most LLCs. Therefore, even though a member may have apparent authority to act on behalf of the LLC in day-to-day operations, such authority to dispose of the entirety or a substantial portion of the LLC’s assets is typically restricted and requires specific authorization from the membership, as outlined in the operating agreement or statutory provisions for major decisions. Without explicit authorization for such a significant sale, a member acting alone may not have the inherent authority to bind the LLC to the transaction. The Michigan Limited Liability Company Act, MCLS § 450.4403, addresses the authority of members in a member-managed LLC, stating that each member is an agent of the LLC for the purpose of its business. However, this agency is subject to limitations, particularly for actions outside the ordinary course of business. The sale of substantially all of the LLC’s assets is generally considered an extraordinary event.

The Michigan Limited Liability Company Act, specifically MCL 450.4103, outlines the requirements for the formation of an LLC. To form a Michigan LLC, a Certificate of Organization must be filed with the Michigan Department of Licensing and Regulatory Affairs. This certificate must include, among other things, the name of the LLC and the name and address of its registered agent. The Act does not mandate a minimum number of members for an LLC, nor does it require a specific duration for the LLC’s existence. While a written operating agreement is highly recommended for internal governance, it is not a prerequisite for the LLC’s legal formation with the state. The filing of the Certificate of Organization is the critical step that legally establishes the LLC.

The Michigan Limited Liability Company Act, specifically MCL 450.4201 et seq., governs the formation and operation of LLCs in Michigan. When an LLC is formed, it is a distinct legal entity separate from its members. This separation is a fundamental principle of corporate law, often referred to as the “corporate veil.” The Act outlines the requirements for filing the Articles of Organization, which include the LLC’s name, registered office, and agent for service of process. The Act also addresses the internal governance of the LLC, which can be detailed in an operating agreement, though an operating agreement is not mandatory for formation in Michigan. However, the internal management structure, including the rights and duties of members and managers, is crucial for understanding how decisions are made and how the LLC operates. The Act permits LLCs to be managed by their members or by designated managers, and this choice significantly impacts operational procedures and member responsibilities. The concept of “piercing the corporate veil” is a legal doctrine that allows courts to disregard the limited liability protection afforded to LLC members when certain conditions are met, such as commingling of personal and business funds or failing to maintain corporate formalities. This doctrine is not automatically triggered by the mere existence of an LLC but requires specific evidence of abuse or disregard for the separate legal entity. Therefore, understanding the operational distinctions and the legal framework that separates the LLC from its members is paramount.

The Michigan Limited Liability Company Act, specifically MCL 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When a member of a Michigan LLC withdraws, the Act outlines the process for determining the fair value of that member’s interest. This valuation is typically performed at the time of withdrawal, considering the LLC’s financial condition and the member’s proportional interest. The Act does not mandate a specific valuation methodology but emphasizes fairness. For instance, if a member withdraws from a Michigan agricultural cooperative LLC, the determination of their economic interest would involve assessing the value of their capital contributions, any undistributed patronage dividends, and their share of the LLC’s assets, net of liabilities, as of the withdrawal date. The calculation would involve determining the total net asset value of the LLC and then multiplying it by the withdrawing member’s ownership percentage. For example, if an LLC has total assets of $500,000 and total liabilities of $100,000, its net asset value is $400,000. If the withdrawing member held a 10% ownership interest, their interest would be valued at $40,000. This process is crucial for ensuring equitable treatment of departing members and maintaining the financial integrity of the cooperative. The Act also provides for dispute resolution mechanisms if the parties cannot agree on the fair value.

The Michigan Limited Liability Company Act, specifically MCLS § 450.4201 et seq., governs the formation and operation of LLCs in Michigan. A key aspect of this act relates to the fiduciary duties owed by members and managers. While LLCs offer flexibility, members and managers are not entirely free from legal obligations. Generally, members of an LLC owe a duty of loyalty and a duty of care to the LLC and its other members. The duty of loyalty typically includes refraining from self-dealing, competing with the LLC, and usurping opportunities belonging to the LLC. The duty of care requires members to act with the care that a reasonably prudent person in a like position would exercise under similar circumstances. However, the extent and nature of these duties can be modified by the operating agreement, as permitted by the Act. For instance, an operating agreement might specify particular standards of conduct or explicitly waive certain fiduciary duties, provided such waivers do not violate public policy or specific statutory prohibitions. Without explicit modification in the operating agreement, the statutory default fiduciary duties apply. Therefore, a member who diverts a business opportunity directly related to the LLC’s established business operations, without the consent of the other members or authorization in the operating agreement, would likely be in breach of their duty of loyalty. This duty is fundamental to maintaining the integrity of the cooperative business structure.

The Michigan Limited Liability Company Act, specifically MCLS § 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When an LLC is formed, it is a distinct legal entity separate from its members. This separation is fundamental to the concept of limited liability. The Act outlines the procedures for filing articles of organization with the Michigan Department of Licensing and Regulatory Affairs. Upon filing, the LLC gains its legal existence. Members are generally not personally liable for the debts or obligations of the LLC. However, this protection is not absolute. Certain actions or circumstances can lead to the “piercing of the corporate veil,” making members personally liable. Such situations typically involve fraud, commingling of funds, failure to maintain separate records, or treating the LLC as an alter ego rather than a distinct entity. The Act also addresses the rights and responsibilities of members, the management structure, and the process for dissolution. The core principle tested here is the legal separation between the LLC and its members, which is the basis of limited liability. The question focuses on the initial act that establishes this legal separation and the subsequent protections afforded to members, contingent on adherence to the Act’s principles.

The Michigan Limited Liability Company Act, specifically MCL 450.4204, addresses the liability of members and managers. This section states that, except as otherwise provided by law, the debts, obligations, and liabilities of a limited liability company are solely the debts, obligations, and liabilities of the company. Furthermore, a member or manager of an LLC is not personally liable for the acts, debts, obligations, or liabilities of the company. This protection extends to actions taken in their capacity as a member or manager. However, this shield is not absolute. Liability can arise if a member or manager personally guarantees a debt, or if their conduct constitutes a tort or fraud, or if they fail to adhere to the LLC’s operating agreement in a manner that directly causes harm. The question focuses on the general principle of limited liability as enshrined in the Act, distinguishing it from personal undertakings or egregious misconduct. The core concept is that the LLC itself is a separate legal entity, and its financial obligations are its own, not those of its individual members or managers, absent specific exceptions outlined in law or arising from personal involvement in wrongful acts.

The Michigan Limited Liability Company Act, specifically MCL 450.4206, outlines the procedures for a member’s withdrawal from a limited liability company. When a member withdraws, the LLC must deliver a distribution to that member. The timing and calculation of this distribution are governed by the operating agreement. If the operating agreement does not specify the timing or method of distribution, the Act mandates that the distribution be made within a reasonable time after the effective date of the withdrawal. A reasonable time is generally understood to be within 120 days, aligning with the timeframe for winding up and liquidating an LLC if the withdrawal causes the LLC to cease operations, or as otherwise determined by the Act’s provisions regarding distributions. The Act prioritizes the operating agreement’s terms, but absent such terms, a prompt and fair distribution is required. This ensures that a withdrawing member receives their economic interest in the LLC without undue delay, while also allowing the LLC sufficient time to manage its affairs and calculate the appropriate distribution amount based on its financial status at the time of withdrawal. The concept of “reasonable time” is context-dependent and can be influenced by the complexity of the LLC’s operations and financial reporting requirements.

In Michigan, the Business Corporation Act (BCA), specifically MCL 450.1101 et seq., governs the formation and operation of corporations. When a cooperative, which is a form of corporation, faces a situation where its directors are unable to reach a consensus on a critical strategic decision, and there is no specific provision in the cooperative’s articles of incorporation or bylaws to address such a deadlock, the Michigan Business Corporation Act provides a default mechanism. This mechanism is designed to resolve situations where the business of the corporation cannot be conducted due to a fundamental disagreement among the governing body. Under MCL 450.1821, a shareholder (or in the case of a cooperative, a member who possesses voting rights equivalent to a shareholder in this context) can petition the circuit court for judicial dissolution of the corporation. The statute outlines grounds for dissolution, including deadlock among directors or shareholders, where the business of the corporation cannot be conducted to the advantage of the members or shareholders. The court, upon finding such a deadlock and that dissolution is the most equitable remedy, can order the dissolution of the cooperative. This process ensures that a business is not indefinitely paralyzed by an irresolvable internal dispute. The key is that the statute provides a recourse when internal governance mechanisms fail and the cooperative’s operations are significantly impaired.

The Michigan Limited Liability Company Act, specifically MCL 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When an LLC is formed, it is a separate legal entity distinct from its members. This separation is fundamental to the concept of limited liability. However, in certain circumstances, courts may disregard this separate entity status and hold the members personally liable for the LLC’s debts and obligations. This is known as “piercing the corporate veil” or, in the context of LLCs, “piercing the LLC veil.” Several factors are considered by Michigan courts when deciding whether to pierce the LLC veil. These typically include: 1. Undercapitalization: The LLC was not adequately funded to cover its reasonably foreseeable liabilities at the time of formation. 2. Failure to observe corporate formalities: While LLCs have fewer formalities than corporations, a complete disregard for the LLC’s separate existence, such as commingling personal and LLC funds, failing to keep separate records, or not holding required member meetings (if any are stipulated in the operating agreement), can be a factor. 3. Commingling of assets: Mixing personal and LLC assets, making it difficult to distinguish between the two. 4. Fraud or illegality: The LLC was used to perpetrate fraud, evade legal obligations, or engage in illegal activities. 5. Disregard of the LLC as a separate entity: Members treat the LLC as an alter ego, rather than a distinct business entity. In the scenario provided, the LLC was undercapitalized, with initial contributions insufficient to cover anticipated operational costs and potential liabilities. Furthermore, the members demonstrably failed to observe any semblance of separate identity, commingling personal funds with business accounts and using LLC assets for personal expenditures without any formal accounting or repayment. The LLC was essentially treated as a personal piggy bank, rather than a distinct business entity. This pattern of behavior strongly indicates a disregard for the LLC’s separate legal status, making the members personally liable for the outstanding debt owed to the supplier. Therefore, the creditor can pursue the personal assets of the members to satisfy the debt.

The Michigan Limited Liability Company Act, specifically MCL 450.4101 et seq., governs the formation and operation of LLCs in the state. When a member of a Michigan LLC withdraws, the Act outlines the procedures and consequences. A member’s dissociation, which can occur voluntarily or involuntarily, triggers a process that may lead to a buyout of their interest. The valuation of this interest is crucial and is typically determined by the LLC’s operating agreement. If the operating agreement is silent on the matter, Michigan law provides default provisions. Upon dissociation, the LLC generally has a period to purchase the interest of the dissociated member. The timing and manner of this purchase, including any potential offsets for damages caused by the dissociation if it was wrongful, are critical considerations. The Act emphasizes the importance of the operating agreement in defining these rights and procedures, but also provides a framework when such an agreement lacks specific provisions. This ensures a structured process for member departures and the continuation of the LLC’s business operations in Michigan.

The Michigan Limited Liability Company Act, specifically MCL 450.4204, outlines the requirements for the initial registered office and agent. A limited liability company must designate a registered office within Michigan and appoint a registered agent at that office. The registered agent is the individual or entity authorized to receive service of process, notices, and demands on behalf of the LLC. This designation is a foundational requirement for the LLC’s legal existence and its ability to conduct business in Michigan. The initial registered office and agent are typically provided in the Articles of Organization filed with the Michigan Department of Licensing and Regulatory Affairs. Failure to maintain a registered office and agent can lead to administrative dissolution. The question probes the fundamental legal obligation of an LLC regarding its official point of contact within the state, which is a core concept in corporate and cooperative governance under Michigan law.

The Michigan Limited Liability Company Act (MCL 450.4101 et seq.) governs the formation and operation of LLCs in Michigan. When a member of a Michigan LLC withdraws, the LLC’s operating agreement or, in its absence, the Act itself, dictates the process for valuing and purchasing the departing member’s interest. The Act generally requires that the LLC or its remaining members purchase the interest of a withdrawing member. The valuation method for this buyout is typically determined by the operating agreement. If the agreement is silent, the Act implies a fair market value approach. However, the Act does not mandate a specific formula or a fixed timeframe for the buyout beyond what is stipulated in the operating agreement or by mutual agreement. The Act prioritizes the contractual agreement between the members. Therefore, the most accurate determination of the buyout terms and timeline for a withdrawing member’s interest in a Michigan LLC would be found within the LLC’s operating agreement, as it supersedes general statutory provisions regarding these specific details, provided it doesn’t violate public policy or mandatory statutory requirements. The Act provides a framework, but the operating agreement offers the specific operational rules for such events.

The Michigan Limited Liability Company Act, specifically MCL 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When an LLC is formed, it must have an operating agreement, which is a foundational document that outlines the internal affairs of the LLC, including the rights and duties of members, the management structure, and the allocation of profits and losses. While not always legally mandated for filing with the state, a well-drafted operating agreement is crucial for defining member relationships and operational procedures. The Act also outlines the requirements for an LLC’s registered agent and office, which are essential for official communications and legal service of process. Dissolution of an LLC involves a formal process, and the distribution of assets upon dissolution is typically governed by the operating agreement and then by state law if the agreement is silent or incomplete on the matter. The concept of “member-managed” versus “manager-managed” is a key distinction in LLC governance, impacting who has the authority to bind the LLC in business transactions. The Act provides default rules for these aspects, but the operating agreement can modify them. The question tests the understanding of the core components and legal framework of an LLC in Michigan, emphasizing the importance of the operating agreement and the statutory provisions governing its structure and operation.

Michigan’s Cooperative Housing Act, specifically MCL 455.201 et seq., governs the formation and operation of cooperative housing corporations. A key aspect of this act relates to the distribution of surplus earnings or net earnings. Unlike traditional corporations that might distribute dividends based on share ownership, cooperatives, particularly those in housing, often have specific provisions for allocating surplus. The Act generally permits the distribution of net earnings to members in proportion to their patronage, which in the context of a housing cooperative, typically means their use of the cooperative’s services or their equity contribution. However, the distribution must be in accordance with the cooperative’s articles of incorporation and bylaws, which are the foundational documents. These documents will detail the specific method of allocation, which could be based on membership duration, housing unit usage, or a combination of factors. The intent is to return excess revenue to the members who contributed to its generation through their participation and payments, aligning with the cooperative principle of member economic participation. The Act does not mandate that such distributions must be made, but it provides the framework if the cooperative chooses to do so. The crucial element is that any distribution must be equitable and consistent with the cooperative’s governing documents and the principles of cooperative enterprise.

The Michigan Limited Liability Company Act, specifically MCLS § 450.4101 et seq., governs the formation and operation of LLCs in Michigan. A key aspect of this act is the concept of “piercing the corporate veil,” which allows creditors to disregard the limited liability protection afforded to LLC members and hold them personally liable for the LLC’s debts. This doctrine is an equitable remedy applied by courts when the LLC is not treated as a separate legal entity. Several factors are considered when determining whether to pierce the veil. These typically include commingling of personal and business funds, failure to maintain separate corporate records, undercapitalization of the LLC, using the LLC as an alter ego or mere instrumentality of the member, and perpetrating fraud or injustice. The question asks about the primary legal basis for disregarding the limited liability of an LLC member in Michigan. This is rooted in the equitable principle that if the LLC structure is abused, the law can step in to prevent unfairness. The Michigan LLC Act itself doesn’t explicitly define “piercing the corporate veil” as a statutory cause of action but rather provides the framework within which this common law doctrine is applied. Therefore, the fundamental legal justification stems from the equitable powers of the court to prevent injustice when the LLC’s separate identity has been disregarded by its members.

The Michigan Limited Liability Company Act, specifically MCLS § 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When a member withdraws from a Michigan LLC, the Act outlines the procedures for dissociation and the subsequent winding up of the LLC’s affairs, or continuation by the remaining members. Dissociation occurs when a member ceases to be associated with the LLC. Under MCLS § 450.4501, a member can dissociate voluntarily or involuntarily. A voluntary dissociation can occur at any time by giving notice to the LLC. An LLC’s operating agreement can also specify events of dissociation. Following dissociation, the LLC must wind up its affairs unless the remaining members agree to continue the business. The process of winding up involves settling the LLC’s affairs, which includes paying off debts, distributing remaining assets to members according to their interests, and filing a statement of termination with the Michigan Department of Licensing and Regulatory Affairs. If the operating agreement does not provide for continuation or if the remaining members do not agree to continue, the LLC must wind up. The question probes the procedural steps following a member’s dissociation, focusing on the legal requirement for winding up unless specific conditions for continuation are met. The correct answer reflects the statutory obligation to cease ordinary business and commence winding up.

The Michigan Limited Liability Company Act, specifically MCLS § 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When an LLC is formed, its existence is typically established through the filing of Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs. This filing is a prerequisite for the LLC to legally operate as a distinct entity. While an operating agreement is crucial for internal governance, it is not the document that officially creates the LLC in the eyes of the state. Similarly, a business license is often required for specific activities but does not establish the legal entity itself. A federal tax identification number is for tax purposes and is obtained after the LLC is formed. Therefore, the filing of Articles of Organization is the foundational step for an LLC’s legal existence in Michigan.

The Michigan Limited Liability Company Act, specifically MCLS § 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When a member withdraws from a Michigan LLC, the Act outlines the process and implications. A member’s withdrawal, often termed “dissociation,” can trigger a buyout of their interest. The valuation of this interest is typically determined by the LLC’s operating agreement. If the operating agreement is silent on the matter, or if the agreement itself is challenged, Michigan law provides default provisions. Under the Act, the LLC generally must purchase the dissociated member’s interest. The price for this purchase is the fair value of the interest as of the date of dissociation, unless otherwise agreed. Fair value is not necessarily book value or market value, but rather a value that reflects the LLC’s worth without considering the dissociation itself. The Act also specifies a timeframe for this buyout, usually 120 days after the dissociation event, and outlines how disputes regarding valuation should be handled, often through appraisal or mediation. The dissociation of a member does not automatically dissolve the LLC unless the operating agreement or the remaining members decide to dissolve it. The remaining members continue to operate the business, and the LLC’s existence persists. The concept of “fair value” is central to ensuring a just transaction for the departing member while allowing the ongoing business to continue without undue disruption.

Michigan’s Cooperative Housing Act, specifically MCL 455.201 et seq., governs the formation and operation of cooperative housing corporations. A key aspect of this act relates to the rights and responsibilities of members and the corporation, particularly concerning amendments to the articles of incorporation and bylaws. When a cooperative housing corporation in Michigan seeks to amend its articles of incorporation, the process typically requires a specific level of member approval as outlined in the articles, bylaws, or state law. Generally, amendments to fundamental governing documents like the articles of incorporation necessitate a higher threshold of consent to ensure significant member consensus for substantial changes. The Cooperative Housing Act itself does not mandate a specific percentage for all amendments, but it does allow the articles and bylaws to set these requirements. However, a common and legally sound practice, often reflecting statutory intent for significant corporate changes, is to require a supermajority vote for such amendments. This supermajority is typically two-thirds of the voting power of the members present and voting at a duly called meeting, or a specified percentage of the total membership, whichever is greater, to safeguard against hasty or ill-considered changes that could negatively impact the cooperative’s structure or the members’ rights. Therefore, a two-thirds vote of the members present and voting at a properly convened meeting is a standard and legally defensible requirement for amending articles of incorporation in Michigan cooperatives, aligning with principles of corporate governance and member protection.

The Michigan Limited Liability Company Act (MCL 450.4101 et seq.) governs the formation and operation of LLCs in Michigan. A key aspect of this act relates to the transferability of membership interests. Generally, a member of an LLC cannot transfer their entire membership interest without the consent of all other members, unless the operating agreement specifies otherwise. This protection is designed to preserve the personal nature of the LLC and the relationships among its members. If an operating agreement allows for the transfer of a membership interest, it typically outlines the procedures and conditions for such a transfer, which might include rights of first refusal for existing members or requirements for the transferee to agree to be bound by the operating agreement. However, even with consent or provisions in the operating agreement, a member transferring their interest typically only transfers their economic rights (the right to receive distributions and share in profits and losses) and not their management rights or status as a member, unless specifically agreed upon. The act distinguishes between assigning a membership interest and admitting a new member. Assignment of economic rights is generally permissible, subject to the operating agreement. Admission of a new member, which includes management rights, requires the consent of all members. Therefore, in the absence of specific provisions in the operating agreement to the contrary, a member’s assignment of their membership interest in Michigan primarily conveys their financial entitlements, not their full membership status or associated management powers.

The Michigan Limited Liability Company Act (MCL 450.4101 et seq.) outlines the requirements for forming and operating LLCs in the state. When an LLC is formed, it gains a separate legal identity from its members. This separation is a fundamental principle of limited liability. However, in certain circumstances, courts may disregard this separate entity status and hold the members personally liable for the LLC’s debts or obligations. This is known as “piercing the corporate veil” or, in the context of LLCs, “piercing the LLC veil.” The primary legal basis for piercing the LLC veil in Michigan is the doctrine of “alter ego” or “instrumentality.” This doctrine is applied when the LLC is not treated as a separate entity, and its operations are so intertwined with those of its members that it essentially becomes their alter ego. Factors considered by courts in Michigan to determine if the veil should be pierced include: (1) failure to observe formalities and separateness between the LLC and its members, such as commingling of funds, lack of separate records, or using LLC assets for personal use; (2) inadequate capitalization of the LLC at the time of its formation, making it unable to meet its potential liabilities; (3) using the LLC to commit fraud or wrong; and (4) the degree of control exercised by the members over the LLC’s affairs. In the scenario presented, the failure of the cooperative LLC to maintain separate financial accounts, the commingling of personal and business funds by its members, and the use of LLC assets for personal expenses without proper documentation strongly suggest that the LLC is being treated as an alter ego of its members. These actions undermine the LLC’s separate legal existence and create a strong basis for piercing the LLC veil, making the members personally liable for the outstanding debt to the supplier. Therefore, the most accurate legal outcome is that the members will be held personally liable for the cooperative LLC’s debt.

The Michigan Limited Liability Company Act, specifically MCL 450.4204, outlines the requirements for a member to withdraw from a limited liability company. A member’s dissociation from an LLC is generally effective upon giving notice to the other members. However, the Act also specifies conditions under which a member’s dissociation can occur involuntarily. One such condition is the occurrence of an event specified in the operating agreement that requires the member’s dissociation. Another is expulsion of the member by the unanimous consent of the other members, but only if the operating agreement permits such expulsion. The Act also addresses dissociation by court order. In this scenario, the operating agreement explicitly states that a member will be dissociated upon the filing of a personal bankruptcy petition. This is a valid provision that triggers dissociation as per the Act. Therefore, the filing of the bankruptcy petition by Mr. Abernathy, as stipulated in the operating agreement, is the event that causes his dissociation from the Michigan LLC. The other options are incorrect because they either misinterpret the conditions for dissociation or cite scenarios not directly supported by the provided information and Michigan law as it pertains to LLC operating agreements. For instance, a member’s mere inability to contribute capital, without an operating agreement provision or a unanimous vote for expulsion, would not automatically cause dissociation. Similarly, a dispute over management without a specific dissociation clause in the operating agreement would not lead to automatic dissociation.

The Michigan Cooperative Housing Law, specifically MCL 455.201 et seq., governs the formation and operation of housing cooperatives in Michigan. A key aspect of this law pertains to the rights and responsibilities of members, particularly concerning the termination of membership and occupancy. When a cooperative housing corporation in Michigan seeks to terminate a member’s occupancy due to a breach of the occupancy agreement, the process is not arbitrary. The law requires the cooperative to follow specific procedures to ensure fairness and due process for the member. These procedures typically involve providing notice of the alleged breach, an opportunity for the member to be heard, and adherence to the cooperative’s bylaws and the state statute. The statute outlines the grounds for termination, which can include non-payment of assessments, violation of occupancy rules, or other material breaches. Crucially, the law does not permit immediate eviction without due process. The cooperative must demonstrate that the member’s actions constitute a material breach and that the termination process has been followed correctly. The cooperative’s board of directors generally has the authority to initiate and oversee this process, acting in accordance with the governing documents and state law. The focus is on the cooperative’s adherence to its own rules and Michigan statutes, ensuring that termination is a last resort and is executed legally.

Michigan law governing cooperatives, particularly the Michigan Limited Liability Company Act (MCL 450.4101 et seq.) and related statutes that may apply to cooperative structures, emphasizes the importance of member rights and the proper conduct of business. When a cooperative entity, structured as a limited liability company or another recognized form, faces a situation where a member’s actions are alleged to be detrimental to the cooperative’s interests, the process for addressing such issues is typically outlined in the cooperative’s operating agreement and governed by state law. For instance, the Michigan Limited Liability Company Act provides mechanisms for addressing member misconduct, which can include expulsion under certain circumstances, provided the operating agreement specifies such grounds and procedures. The law generally requires that any such action be taken in good faith and in accordance with the established governance documents. The concept of “oppressive conduct” is a key legal principle that allows courts to intervene when the majority or those in control of a business entity act in a way that unfairly prejudices the minority. In the context of a cooperative, this could involve actions that undermine the cooperative’s purpose or unfairly disadvantage specific members. The specific grounds for expulsion or other remedies would be detailed within the cooperative’s governing documents, which are paramount in defining member rights and responsibilities. The Michigan Limited Liability Company Act, in Section 450.4504, addresses the rights of members, including the right to seek judicial dissolution in cases of oppressive conduct. While direct expulsion without due process or a basis in the operating agreement would be legally questionable, the law provides avenues for the cooperative to address member conduct that harms the entity, often through a process that respects the rights of the accused member, such as notice and an opportunity to be heard, and adherence to the cooperative’s bylaws or operating agreement.

The Michigan Cooperative Housing Act, specifically MCL 430.251 et seq., outlines the framework for the formation and operation of housing cooperatives in the state. A key aspect of this act pertains to the rights and responsibilities of members, particularly concerning the transfer of their membership interests. When a member wishes to transfer their membership, the cooperative’s governing documents, such as the articles of incorporation and bylaws, typically dictate the procedures. These procedures often involve a right of first refusal for the cooperative or existing members, a requirement for board approval of the prospective transferee, and adherence to specific notice periods. The Act aims to balance the individual member’s right to transfer their interest with the cooperative’s need to maintain control over its membership to ensure the financial stability and community cohesion of the cooperative. Without proper adherence to these established procedures, a purported transfer may be deemed invalid or subject to challenge by the cooperative or other members, potentially leading to legal disputes. The cooperative’s board of directors plays a crucial role in overseeing these transfers, ensuring compliance with both state law and the cooperative’s internal rules.

The Michigan Limited Liability Company Act (MCL 450.4101 et seq.) governs the formation and operation of LLCs in Michigan. When a member of a Michigan LLC withdraws, the Act outlines the procedures and rights concerning the member’s interest. A withdrawing member is generally entitled to receive the fair value of their interest in the LLC. This fair value is determined as of the date of dissociation, which is often the date of withdrawal or a later date specified in the operating agreement. The determination of fair value is a critical aspect, and it typically involves an appraisal process. The LLC may have the option to purchase the interest, or if a purchase is not agreed upon, the withdrawing member can pursue a judicial determination of fair value. The Act also specifies timelines for payment and potential adjustments. Understanding the specific provisions related to dissociation, buyouts, and the valuation of membership interests is crucial for both the withdrawing member and the remaining LLC members to ensure compliance with Michigan law and to maintain the LLC’s operational continuity. This process is distinct from a simple sale of an interest, as it involves statutory rights and obligations tied to the member’s departure from the entity.

The Michigan Limited Liability Company Act, specifically MCL 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When a member’s dissociation from an LLC is wrongful, the remaining members are entitled to damages. Wrongful dissociation occurs when a member dissociates in contravention of a written operating agreement. In this scenario, Mr. Henderson’s dissociation was not permitted by the operating agreement, making it wrongful. The Act provides that upon wrongful dissociation, the LLC may recover from the dissociating member damages for breach of the operating agreement, offset against the amount otherwise due to the dissociating member. The calculation of damages involves determining the value of the LLC at the time of dissociation, subtracting any liabilities, and then multiplying by the member’s ownership percentage to find their share of the net value. The wrongful dissociation damages are then calculated as the difference between the LLC’s net value attributable to the dissociating member and the amount the LLC would have owed them if the dissociation had been proper. Let \(V_{LLC}\) be the total value of the LLC. Let \(L_{LLC}\) be the total liabilities of the LLC. The net value of the LLC is \(NV_{LLC} = V_{LLC} – L_{LLC}\). Mr. Henderson’s ownership percentage is \(P_{Henderson} = 30\%\). The value of Mr. Henderson’s interest if dissociated properly would be \(W_{Henderson} = P_{Henderson} \times NV_{LLC}\). The LLC’s net value attributable to Mr. Henderson is \(V_{Henderson} = P_{Henderson} \times NV_{LLC}\). Damages for wrongful dissociation are \(D_{Wrongful} = V_{Henderson} – W_{Henderson}\). In this case, \(V_{LLC} = \$500,000\) and \(L_{LLC} = \$100,000\). So, \(NV_{LLC} = \$500,000 – \$100,000 = \$400,000\). Mr. Henderson’s ownership percentage is \(P_{Henderson} = 30\%\) or \(0.30\). The value of Mr. Henderson’s interest if dissociated properly would be \(W_{Henderson} = 0.30 \times \$400,000 = \$120,000\). The LLC’s net value attributable to Mr. Henderson is \(V_{Henderson} = 0.30 \times \$400,000 = \$120,000\). Since the dissociation was wrongful, the LLC can recover damages. The Act allows for the offset of damages against the buyout amount. The damages are specifically for the breach of the operating agreement caused by the wrongful dissociation. The value of the dissociating member’s interest is determined as if the dissociation was proper, and then the damages for the wrongful act are calculated. In this specific instance, the calculation of damages for wrongful dissociation under Michigan law is typically the amount by which the LLC’s interest in the dissociating member’s contribution exceeds the value of the dissociating member’s interest. However, the Michigan LLC Act allows the LLC to recover damages for breach of contract, which is the operating agreement. The damages are the losses incurred by the LLC due to the member’s breach. In a scenario where the operating agreement is breached by wrongful dissociation, the LLC can recover the actual losses it suffered. If the operating agreement stipulated a specific penalty or formula for wrongful dissociation, that would be applied. Absent such a specific clause, the damages would be the direct losses caused by the breach. The value of the member’s interest is what they are entitled to upon dissociation, but the damages are separate. If the member’s share of the net value is \( \$120,000 \), and the LLC suffered \( \$50,000 \) in losses directly attributable to the wrongful dissociation (e.g., disruption of operations, costs of finding a replacement), then the LLC could offset these \( \$50,000 \) in damages against the \( \$120,000 \) buyout. Therefore, the net amount payable to Mr. Henderson would be \( \$120,000 – \$50,000 = \$70,000 \). However, the question asks for the amount of damages the LLC can recover. The damages are the losses incurred due to the breach of the operating agreement. Let’s re-evaluate the calculation based on the standard interpretation of “damages for breach of the operating agreement.” This typically refers to the actual losses suffered by the LLC due to the wrongful dissociation. If the operating agreement does not specify a liquidated damages clause for wrongful dissociation, the LLC must prove its actual damages. For the purpose of this question, let’s assume the LLC incurred direct losses of \( \$50,000 \) due to Mr. Henderson’s premature departure, such as the cost of expedited recruitment for a replacement and disruption to ongoing projects. The net value of Mr. Henderson’s interest in the LLC, calculated as if he had dissociated properly, is \(0.30 \times (\$500,000 – \$100,000) = 0.30 \times \$400,000 = \$120,000\). The damages for wrongful dissociation are the actual losses incurred by the LLC due to the breach of the operating agreement. Assuming these losses are \( \$50,000 \). The LLC can recover these damages. The Act permits the LLC to offset these damages against the amount otherwise payable to the dissociating member. Thus, the net amount paid to Mr. Henderson would be \( \$120,000 – \$50,000 = \$70,000 \). The question asks for the amount of damages the LLC can recover from Mr. Henderson for his wrongful dissociation. This is the direct loss suffered by the LLC due to the breach of the operating agreement. The Michigan Limited Liability Company Act, specifically MCL 450.4503, addresses dissociation. When a dissociation is wrongful, meaning it contravenes the operating agreement, the LLC is entitled to recover damages for breach of the operating agreement. These damages are calculated based on the actual losses incurred by the LLC as a result of the member’s breach. The Act allows for these damages to be offset against any distribution owed to the dissociating member. In this scenario, Mr. Henderson’s dissociation was in violation of the operating agreement, thus it is wrongful. The LLC’s net value is \( \$500,000 \) in assets minus \( \$100,000 \) in liabilities, resulting in a net value of \( \$400,000 \). Mr. Henderson’s ownership stake is \( 30\% \), meaning his share of the LLC’s net value is \( 0.30 \times \$400,000 = \$120,000 \). However, this is the amount he would be entitled to if his dissociation were proper. For a wrongful dissociation, the LLC can claim damages that represent the harm caused by the breach of the operating agreement. If the LLC suffered direct losses of \( \$50,000 \) due to Mr. Henderson’s actions (e.g., lost profits from a disrupted project, costs of finding a replacement), this amount constitutes the damages for the breach. The LLC can recover these \( \$50,000 \) in damages. The net effect is that the LLC would owe Mr. Henderson \( \$120,000 \) minus \( \$50,000 \) in damages, totaling \( \$70,000 \). The question specifically asks for the damages the LLC can recover, which is the direct loss from the breach. Final Answer: The final answer is $\(50000\)$

The Michigan Limited Liability Company Act, specifically MCL 450.4101 et seq., governs the formation and operation of LLCs in Michigan. When an LLC is formed, it is considered a separate legal entity from its members. This separation is a fundamental principle of corporate law, often referred to as the corporate veil. The Act outlines the requirements for filing articles of organization, which include the LLC’s name, registered office and agent, and the management structure. Members of an LLC generally have limited liability, meaning their personal assets are protected from the LLC’s debts and obligations. However, this protection is not absolute and can be pierced under certain circumstances, such as commingling personal and business funds or engaging in fraudulent activities. The Act also addresses the rights and responsibilities of members, the admission and withdrawal of members, and the dissolution of the LLC. For a cooperative, which is a business owned and operated by its members for their mutual benefit, the structure of an LLC can be a suitable legal framework. The cooperative principles, such as voluntary and open membership, democratic member control, member economic participation, autonomy and independence, education, training and information, cooperation among cooperatives, and concern for community, would be integrated into the LLC’s operating agreement and business practices. The formation of an LLC in Michigan for cooperative purposes requires adherence to both the LLC Act and any specific state or federal regulations pertaining to cooperatives, if applicable, to ensure proper governance and member benefit realization.