In a few states, the LLC's articles of organization or operating agreement may prohibit member withdrawal. They could do so by placing a liquidated damages clause in the operating agreement that applies when a member withdraws. The liquidated damages could be a substantial dollar amount that a wrongfully withdrawing member must pay. The obligation to pay a dissociating LLC member may be controlled by the operating agreement and is usually defined by each state's LLC statute. The LLC statutes use several different formulas to determine the amount the dissociating member must be paid.
Some states require payment equal to the member's contributions.
Other states require payment of the fair market value of the member's interest. Payment of the value of a dissociating member's interest usually must be made within a specified time period. Payment may be in cash or in kind, meaning that the dissociating member may receive LLC property instead of cash. In some states, the operating agreement may provide that dissociating members are not entitled to in-kind payment. However, the statutes may also provide that dissociating members are not obligated to accept in-kind distributions that are disproportionate to the distributions made to other members.