Opinion ID: 4105752
Heading Depth: 2
Heading Rank: 2

Heading: Dissolution of Source 1

Text: The members unanimously voted to dissolve Source 1 on April 4, 2012, with the dissolution to be as of April 1, 2012. The Operating Agreement for Source 1 (“Operating Agreement”) provided that in case of the dissolution of Source 1, a “Liquidator” was to be appointed by a “Majority Vote of Membership Shares” to “wind up the affairs of the company and make final Distributions as provided in this Agreement and in the Act.” The Liquidator was to work “diligently” at the task with “all of the power and authority of the Members.” The Operating Agreement required the Liquidator to give an accounting of Source 1’s assets and liabilities “[a]s promptly as possible after dissolution and again after final liquidation,” give notice to its creditors, and “sell or liquidate all of the Company’s assets.” The Operating Agreement further provided that the proceeds of such sale or liquidation were to be distributed first to the Company’s creditors—including Members—then to establish “any Reserve that the Liquidator deems reasonably necessary for contingent or unforeseen obligations of the Company.” Any balance remaining was to be distributed to the Members in accordance with the “positive balances in their Capital Accounts.” Hodge, Brown, and Clairborne voted to appoint Hodge as Liquidator, and Hodge accepted the appointment. On April 9, 2012, Source 1 received a very large order ($233,481.84) from its largest customer, Bodybuilding.com. Source 1 never processed this order. On April 13, 2012, the members participated in a telephone conference call with Source 1’s attorney concerning the dissolution process. Hodge estimated that Source 1 could still fill its existing orders if it reduced its staff by half and that the orders could be filled by the first week of June. Hodge also predicted that such orders could be filled at a profit. On April 16, 2012, Brown filed a Certificate of Organization for Source 2, which listed Brown, Hodge, and Desiree Clairborne as members. Hodge is the majority owner and a managing member of Source 2. On April 25, 2012, the final Statement of Dissolution for Source 1 was filed. After the dissolution of Source 1, both Prehn and Hodge planned to create new 3 businesses to operate in the same market in which Source 1 previously operated. Prehn and Bandak filed this suit against Appellants on April 27, 2012.