Outside accounting ordered in LLC dissolution

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This appeal originates from a complaint for declaratory relief, accounting, and dissolution of Kessler Advisor, LLC (“Kessler”), a limited liability company (“LLC”) owned by Jeff Perkins and James R. Brown. Kessler was dissolved by stipulation prior to the trial. Perkins appeals the trial court’s judgment in favor of Brown in the amount of $155,175.84, representing fifty percent of the net profits and retained earnings of Kessler. He raises two issues on appeal, which we consolidate and restate as: whether the trial court erred when it entered judgment against Perkins personally without ordering an outside accounting of the finances of Kessler.

Conclusion (slip op. at 8):  Because we conclude that the trial court erred when it failed to order a thorough outside accounting of Kessler’s finances, it abused its discretion when it denied Perkins’s motion to correct error. We reverse and remand with instructions for the trial court to order and oversee an outside accounting of Kessler’s finances in order to determine proper distribution to the LLC’s creditors as well as to Perkins and Brown.

Key Analysis (slip op. at 7, 8):  Without any direct evidence regarding Kessler’s finances or whether Perkins authorized any unlawful distributions after June 2006, the trial court was unable to accurately determine if Kessler received all of the money that it was owed under its outstanding invoices, who the creditors of the LLC were, what Kessler’s actual expenses were, and if twenty percent of the accounts receivables would have covered the expenses. Additionally, the trial court was unable to accurately determine whether Perkins made any distributions during this period of time that would have created personal liability . . . Without completing the proper procedural steps of conducting an accounting and receiving all of Kessler’s pertinent financial information at the time of dissolution, we cannot be certain that the assets were distributed according to statute.

About Bose McKinney & Evans LLP

Bose McKinney & Evans LLP is a business law firm, headquartered in Indianapolis, Indiana, serving both publicly held and privately held businesses, governmental entities and high-growth industries. Our clients include Fortune 100 companies, international manufacturers, national and regional financial institutions, agribusinesses, sports teams, university-incubated start-ups, media, utilities, cities and schools, to name a few. We strive to build strong relationships with our clients as key business advisors, to exceed expectations in the quality of our work, to be knowledgeable about our clients’ businesses and sectors, to be responsive to service needs and to continually seek to improve the delivery of client services. Our ultimate focus is on our clients.
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