Outside accounting ordered in LLC dissolution

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The Indiana Court of Appeals reversed a judgment in favor of one of the owners of a dissolved LLC, finding the trial court erred when it entered judgment against the other owner personally without ordering an outside accounting of the company's finances.

In Jeff Perkins v. James R. Brown, No. 49A02-0806-CV-569, Jeff Perkins appealed a judgment entered against him for $155,175, which represented 50 percent of the net profits and retained earnings of his and James Brown's executive search firm, Kessler Advisor LLC. When the company was formed, Perkins handled business development, and Brown handled search work, sent invoices to clients, and managed the accounting needs.

Brown objected to Perkins' desire to give greater compensation for business development instead of the even split between their two job duties. Actions were taken to keep him from having access Kessler's business, accounting, and customer information.

Brown filed a complaint against Perkins and Kessler, requesting declaratory judgment as to the ownership percentages, an equitable accounting of the company, and that it is dissolved with the net remaining assets distributed according to the ownership percentages.

Brown submitted evidence at trial that he believed Kessler's total income was nearly $388,000 and that usually 20 percent of that was used to cover operating expenses. Judgment was granted in favor of Brown and against Kessler and Perkins, awarding Perkins and Brown $155,175 each. Perkins filed a motion to correct error, which was denied. Brown's motion to amend the pleadings was granted.

The trial court erred in determining the amount of damages in the dissolution of Kessler without ordering an outside accounting of the company's finances, wrote Judge James Kirsch. There was no evidence presented at trial of what the actual finances of the company were prior to the dissolution, what income it actually received or what the expenses were at this time.

Without any direct evidence, the trial court couldn't accurately determine if Kessler had all the money it was owed from outstanding invoices, who its creditors were, and if 20 percent would have covered all the expenses, wrote the judge. Plus, the trial court was unable to determine whether Perkins made any distributions during this period of time that would have created personal liability.

Asset distribution upon the ending of an LLC must be distributed according to Indiana Code Section 23-18-9-6, but without the outside accounting, the Court of Appeals can't tell the assets were distributed according to the statute.

The appellate court reversed the denial of Perkins' motion to correct error and remanded with instructions for the trial court to order and oversee an outside accounting to determine the proper distribution to Kessler's creditors as well as to Brown and Perkins. The trial court also shall make an appropriate entry of damages due to each party, including any determination of personal liability of Perkins under the Indiana Business Flexibility Act.


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  1. I think the cops are doing a great job locking up criminals. The Murder rates in the inner cities are skyrocketing and you think that too any people are being incarcerated. Maybe we need to lock up more of them. We have the ACLU, BLM, NAACP, Civil right Division of the DOJ, the innocent Project etc. We have court system with an appeal process that can go on for years, with attorneys supplied by the government. I'm confused as to how that translates into the idea that the defendants are not being represented properly. Maybe the attorneys need to do more Pro-Bono work

  2. We do not have 10% of our population (which would mean about 32 million) incarcerated. It's closer to 2%.

  3. If a class action suit or other manner of retribution is possible, count me in. I have email and voicemail from the man. He colluded with opposing counsel, I am certain. My case was damaged so severely it nearly lost me everything and I am still paying dearly.

  4. There's probably a lot of blame that can be cast around for Indiana Tech's abysmal bar passage rate this last February. The folks who decided that Indiana, a state with roughly 16,000 to 18,000 attorneys, needs a fifth law school need to question the motives that drove their support of this project. Others, who have been "strong supporters" of the law school, should likewise ask themselves why they believe this institution should be supported. Is it because it fills some real need in the state? Or is it, instead, nothing more than a resume builder for those who teach there part-time? And others who make excuses for the students' poor performance, especially those who offer nothing more than conspiracy theories to back up their claims--who are they helping? What evidence do they have to support their posturing? Ultimately, though, like most everything in life, whether one succeeds or fails is entirely within one's own hands. At least one student from Indiana Tech proved this when he/she took and passed the February bar. A second Indiana Tech student proved this when they took the bar in another state and passed. As for the remaining 9 who took the bar and didn't pass (apparently, one of the students successfully appealed his/her original score), it's now up to them (and nobody else) to ensure that they pass on their second attempt. These folks should feel no shame; many currently successful practicing attorneys failed the bar exam on their first try. These same attorneys picked themselves up, dusted themselves off, and got back to the rigorous study needed to ensure they would pass on their second go 'round. This is what the Indiana Tech students who didn't pass the first time need to do. Of course, none of this answers such questions as whether Indiana Tech should be accredited by the ABA, whether the school should keep its doors open, or, most importantly, whether it should have even opened its doors in the first place. Those who promoted the idea of a fifth law school in Indiana need to do a lot of soul-searching regarding their decisions. These same people should never be allowed, again, to have a say about the future of legal education in this state or anywhere else. Indiana already has four law schools. That's probably one more than it really needs. But it's more than enough.

  5. This man Steve Hubbard goes on any online post or forum he can find and tries to push his company. He said court reporters would be obsolete a few years ago, yet here we are. How does he have time to search out every single post about court reporters and even spy in private court reporting forums if his company is so successful???? Dude, get a life. And back to what this post was about, I agree that some national firms cause a huge problem.