If an LLC is required or elects to purchase a membershipinterest at fair value under § 48-249-505, then:
(1)Communication by LLC. The LLC shall communicate its determination of fair value, and its proposed terms of payment, to the member, or the member’s personal representative, who is entitled to receive payment in consideration for the member’s terminated membership interest, not later than thirty (30) days after the date of termination, or, if applicable, thirty (30) days after the later date of an election made under § 48-249-505(b)(2). Such communication shall be accompanied by:
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Terms Used In Tennessee Code 48-249-506
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Court: includes every court and judge having jurisdiction in the case. See Tennessee Code 48-202-101
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
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.
Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
LLC: means a limited liability company, organized under chapters 201-248 of this title. See Tennessee Code 48-202-101
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
Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
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
Principal executive office: means the office, in or out of this state, that is designated as the principal executive office of a domestic or foreign LLC in its articles or in an application for a certificate of authority, as applicable, as thereafter changed from time to time in accordance with this chapter. See Tennessee Code 48-249-102
Proceeding: means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal. See Tennessee Code 48-249-102
Record: means information that is inscribed in a tangible medium, or that is stored in an electronic or other medium, and is retrievable in perceivable form. See Tennessee Code 48-249-102
Registered office: means the office in this state that is designated as the registered office of a domestic or foreign LLC in its articles or in an application for a certificate of authority, as applicable, as thereafter changed from time to time in accordance with this chapter. See Tennessee Code 48-249-102
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
State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
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
(A) A statement of the LLC’s assets and liabilities as of the date of termination;(B) The LLC’s latest available balance sheet and income statement, if any; and(C) An explanation of how the determination of fair value was made;(2)LLC documents govern. If the amount of fair value and other terms of payment are fixed or are to be determined by the LLC documents, the amount and terms so fixed or determined govern; and(3)Judicial determination of fair value.(A) If an agreement as to the amount of fair value and payment terms is not made within one hundred twenty (120) days after the termination date, or, if applicable, the later date of an election made under § 48-249-505(b)(2), either the member whose membership interest has terminated, or the member’s personal representative, or the LLC may, within another one hundred twenty (120) days, commence a proceeding against the other to determine the fair value and payment terms. Any such proceeding shall be brought in a court of record having equity jurisdiction in the county where the LLC’s principal executive office, or, if not in this state, its registered office is located. The LLC, at its expense, shall notify all of the remaining members in writing, and any other person the court directs, of the commencement of the proceeding. The jurisdiction of the court in which the proceeding is commenced under this subdivision (3) is plenary and exclusive. The court shall determine the fair value of the membership interest, in accordance with the standards set forth in subdivision (3)(B) together with the terms for payment; and(B) In a proceeding brought to determine the fair value of a membership interest in an LLC, the court:
(i) Shall enforce any governing terms in the LLC documents as to the amount of fair value and other terms of payment as provided in subdivision (2);(ii) In the absence of any such governing terms in the LLC documents, shall determine the fair value of the membership interest, considering, among other relevant evidence, the going concern value of the LLC, any other agreement among any members fixing the price or specifying a formula for determining value of membership interests for any other purpose, the recommendations of an appraiser appointed by the court, if any, the recommendations of any of the appraisers of the parties to the proceeding, and any legal or financial constraints on the ability of the LLC to purchase the membership interest;(iii) Shall specify the terms of the purchase, including, if appropriate, terms for installment payments, subordination of the purchase obligation to the rights of the other creditors of the LLC, security, including the purchased membership interest, for a deferred purchase price, and a covenant not to compete or other restriction on the member whose membership interest has terminated;(iv) Shall require, subject to retention of any security interest by the member whose membership interest has terminated under subdivision (3)(B)(iii) the member whose membership interest has terminated to deliver an instrument of transfer of the membership interest to the LLC upon receipt of the purchase price or the first installment of the purchase price;(v) May award one (1) or more other parties their reasonable expenses, including attorney’s fees and the expenses of appraisers or other experts, incurred in the proceeding, if the court finds that a party to the proceeding violated such party’s obligations to act in good faith and to engage in fair dealing set forth in § 48-249-403(d); and(vi) Shall order that interest, at the rate specified for judgments under § 47-14-121, shall be paid on such amount, from the date such amount was determined to be due through the date of payment, if the court determines that all or any installment of the amounts to be paid in respect of the terminating member’s membership interest should have been paid prior to the date of judgment.
