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. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  2. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

  3. (A)ll (C)riminals (L)ove (U)s is up to their old, "If it's honorable and pro-American, we're against it," nonsense. I'm not a big Pence fan but at least he's showing his patriotism which is something the left won't do.

  4. While if true this auto dealer should be held liable, where was the BMV in all of this? How is it that the dealer was able to get "clean" titles to these vehicles in order to sell them to unsuspecting consumers?

  5. He has refused his Assent to Laws, the most wholesome and necessary for the public good. He has forbidden his Governors to pass Laws of immediate and pressing importance, He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: For imposing Taxes on us without our Consent: He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.. He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless [ ] Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions. GOD BLESS THE GOVERNORS RESISTING! Count on the gutless judiciary to tie our children down and facilitate the swords being drawn across their throats. Wake Up America ...