(a)Events constituting termination. A member‘s membership interest in an LLC is terminated upon the occurrence of any of the following events:

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Terms Used In Tennessee Code 48-249-503

  • articles of organization: means , in the case of an LLC, articles of organization or, to the extent applicable with respect to an LLC initially formed under and governed by the Tennessee Limited Liability Company Act, compiled in chapters 201-248 of this title, articles of conversion, taken together with all of the following, to the extent they modify, correct, restate or otherwise affect the articles of organization or articles of conversion: articles of amendment, articles of correction, certificates of merger and all documents required to be filed with any of the articles of amendment, articles of correction and certificates of merger, as part of the formation and continuation of an LLC. See Tennessee Code 48-249-102
  • Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Business: means every trade, occupation, profession, investment activity, and other lawful purpose for gain or the preservation of assets, whether or not carried on for profit. See Tennessee Code 48-249-102
  • Charter: includes amended and restated charters and articles of merger. See Tennessee Code 48-11-201
  • Code: means the Internal Revenue Code of 1986 (26 U. See Tennessee Code 48-249-102
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Court: includes every court and judge having jurisdiction in the case. See Tennessee Code 48-202-101
  • Dissolution: means that the LLC has incurred an event under §. See Tennessee Code 48-202-101
  • Distribution: means a direct or indirect transfer of money or other property by an LLC, except for the issuance of its own membership interests or financial rights, with or without consideration, or an incurrence or issuance of indebtedness, whether directly or indirectly, including through a guaranty, to or for the benefit of any of its members or holders of financial rights, as applicable, in respect of membership interests or financial rights. See Tennessee Code 48-249-102
  • Entity: means , whether foreign or domestic and whether for profit or not-for-profit, limited liability companies, corporations, unincorporated associations, real estate investment trusts, statutory or business trusts or associations, estates, general partnerships, limited partnerships, registered or unregistered limited liability partnerships, limited liability limited partnerships or similar organizations, trusts, joint ventures, two (2) or more persons having a joint or common economic interest, and local, municipal, state, United States and foreign governments. See Tennessee Code 48-249-102
  • Financial rights: means a member's or holder's rights to:
    (A) Share in profits and losses, as provided in §. See Tennessee Code 48-249-102
  • foreign: means a limited liability company that is formed under the laws of a jurisdiction other than this state. See Tennessee Code 48-249-102
  • Individual: includes the estate of an incompetent or deceased individual. See Tennessee Code 48-11-201
  • Interest: means either or both of the following rights under the organic law of an unincorporated entity:
    (A) The right to receive distributions from the entity either in the ordinary course or upon liquidation. See Tennessee Code 48-11-201
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • LLC: means a limited liability company, organized under chapters 201-248 of this title. See Tennessee Code 48-202-101
  • LLC documents: means either, or both:
    (A) An LLC's articles. See Tennessee Code 48-249-102
  • Member: means a person that has been admitted to an LLC as a member, as provided in §. See Tennessee Code 48-249-102
  • Membership: means the rights and obligations a member has pursuant to a corporation's charter, bylaws and chapters 51-68 of this title. See Tennessee Code 48-51-201
  • Membership interest: means a member's interest in an LLC, which shall consist of the member's financial rights and governance rights. See Tennessee Code 48-249-102
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Personal representative: means , as to an individual, the executor, administrator, guardian, conservator, trustee or other legal representative of the individual, and, as to an entity, the legal representative or successor of the entity. See Tennessee Code 48-249-102
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Representative: means , as to a foreign LLC, a director, manager, officer, employee or other agent of a foreign LLC. See Tennessee Code 48-249-102
  • Termination: means the end of an LLC's existence as a legal entity and occurs when the articles of termination are filed with the secretary of state under §. See Tennessee Code 48-202-101
  • Transfer: means an assignment, conveyance, deed, bill of sale, lease, mortgage, security interest, encumbrance, gift and transfer by operation of law. See Tennessee Code 48-249-102
  • Trustee: A person or institution holding and administering property in trust.
  • written: means any information in the form of a document. See Tennessee Code 48-11-201
(1) The LLC receives written notice from the member of the member’s express will to withdraw upon the date of the notice, or on a later date specified by the member in the notice;
(2) An event specified in the LLC documents as causing the member’s membership interest to terminate;
(3) The transfer of all of the member’s financial rights, unless the transfer is for security purposes, and has not been foreclosed or is under a court order charging the member’s financial rights;
(4) The member is expelled under the LLC documents;
(5) The member is expelled by unanimous vote of the other members entitled to vote, if:

(A) It is unlawful to carry on the business of the LLC with the member;
(B)

(i) The member is a corporation or an LLC;
(ii) Within ninety (90) days after the LLC notifies the member that it will be expelled, because it has filed a certificate of dissolution, or the equivalent, its charter or articles of organization, or the equivalent, have been revoked, or its right to conduct business has been suspended by the jurisdiction of its formation; and
(iii) The member fails to obtain a revocation of the certificate of dissolution or a reinstatement of its charter or articles of organization, or the equivalent, or its right to conduct business within such ninety-day period; or
(C) The member is a general or limited partnership and has been dissolved and its business is being wound up;
(6) On application by the LLC or another member, the member is expelled by judicial determination, because the member:

(A) Engaged in wrongful conduct that adversely and materially affected the LLC’s business;
(B) Willfully or persistently committed a material breach of the LLC documents, or of a duty owed under § 48-249-403 to the LLC or to other members or to holders; or
(C) Engaged in conduct relating to the LLC’s business that makes it not reasonably practicable to carry on the business with the member;
(7) The member:

(A) Files a petition as a debtor in bankruptcy;
(B) Executes an assignment for the benefit of creditors;
(C) Seeks, consents to, or acquiesces in the appointment of a trustee, receiver or liquidator for or of the member, or for or of all or substantially all of the member’s property; or
(D) Fails, within ninety (90) days after the filing or appointment, to have dismissed the filing against the member of an involuntary petition in bankruptcy, or to have vacated or stayed the appointment of a trustee, receiver or liquidator for or of the member, or for or of all or substantially all of the member’s property obtained without the member’s consent or acquiescence, or fails within ninety (90) days after the expiration of a stay, to have the appointment vacated;
(8) In the case of a member who is an individual:

(A) The member dies;
(B) A personal representative is appointed for the member; or
(C) A judicial determination that the member has become incapable of performing the member’s duties under the LLC documents;
(9) In the case of a member that is a trust or is acting as a member by virtue of being a trustee of a trust, the distribution of all of the trust’s financial rights, but not merely by reason of the substitution of a successor trustee; provided, however, that a distribution to a beneficiary of a trust established under § 2503(c) of the Code ( 26 U.S.C. § 2503(c) ), or a trust that is treated under § 676 of the Code ( 26 U.S.C. § 676 ), as owned by the settlor of the trust, shall not be considered to be a distribution of financial rights under this subdivision (a)(9);
(10) In the case of a member that is an estate, or is acting as a member by virtue of being a personal representative of an estate, distribution of all of the estate’s financial rights, but not merely the substitution of a successor personal representative or beneficiary;
(11) In the case of a custodianship under the Uniform Transfers to Minors Act, compiled in title 35, chapter 7, or the equivalent law of any foreign jurisdiction, a transfer of the financial rights held by the custodian, but not a transfer to the beneficiary for whom the custodian is holding the financial rights; or
(12) Termination of the existence of a member, if the member is an entity other than an estate, or trust, other than a business trust.
(b)Power to terminate.

(1) Except as otherwise provided in subdivision (b)(2), and subject to § 48-249-504, a member has the power and right to terminate such member’s membership interest at any time, including, without limitation, upon withdrawal by express will under subdivision (a)(1). A provision in the LLC documents that negates any right of a member to terminate the member’s membership interest shall also automatically negate the corresponding power of the member to terminate the member’s membership interest, unless the corresponding power of the member to terminate the member’s membership interest is expressly reserved. Any attempted termination of a member’s membership interest as to which the power to terminate has been negated shall be null and void.
(2) No member of a family LLC has either the power or the right to terminate the membership interest or financial rights of such member in such family LLC. No event specified in subdivisions (a)(1), (a)(3), (a)(7), (a)(8), (a)(9), (a)(10), (a)(11) or (a)(12) shall result in the termination of the membership interest or financial rights of a member of a family LLC. In the event that a member of a family LLC attempts to terminate the member’s membership interest or financial rights by withdrawal by express will under subdivision (a)(1), such attempted termination shall be null and void.
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