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Lincoln Provision, Inc. v. Puretz, 1/5/15
February 2, 2017

In a suit brought pursuant to the Illinois Limited Liability Company Act, the district court erred in awarding one member of a limited liability company (LLC) $880,000, plus interest, as fair value for that member’s ownership interest in the LLC. The evidence supported a conclusion that the members agreed to a proportional return of capital prior to any distribution of profits and losses, even though they never finalized an operating agreement. Because that member contributed only a $100,000 payment to an escrow account, and did not make an agreed upon 30 percent contribution to capital, the member was entitled only to the return of the $100,000 payment and not to a 30 percent distribution. The district court did not clearly err by not assigning value to the business plan, to the “sweat equity”, or to the unperformed promises of services as the LLC was never operational. The decision of the lower court was reversed and remanded with instructions.