The parties in a divorce owned an LLC, which operated a quarry. It was marital property and had to be divided between the parties. The wife was a member of the LLC. The husband was not a member of the LLC.

The Court awarded to Husband all of Wife’s membership interest. The husband was ordered to pay his Wife $19,500 in exchange.

Wife appealed. She argued that this violated the LLC’s operating agreement. The unanimous written consent of the other LLC members was a requirement. Also, the family-owned LLC did not want the Husband to be part of the LLC.

Also, the Wife argued that the LLC Agreement had its own formula for valuation. The parties and the Court did not need to go through all of the accounting steps to come up with a value.

No Illinois case requires a court to distribute marital property in accordance with an operating agreement. The parties returned to Court many times over the LLC issues in this case. A court should try to find a solution that is as final as possible. That lets the parties move on. That could have been done by letting the LLC divide the property by its own rules.

The Appellate Court said that the Trial Court order clearly violated the terms of the LLC’s operating agreement. The LLC’s operating rules had its own formula for a buyout due to a divorce. The case was returned to the Trial Court to resolve everything properly.

In Re the Marriage of Schlichting, 2014 IL App (2d) 140158.

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