Charging interest for a Corp members unpaid debt?

[RichinsCrew]

Jurisdiction

Wyoming

Hello, first off, we do have an Attorney hired, but currently Mr. XXX JD is on a 20th anniversary cruise with his family (we probably can't contact him right now plus don't want to bother the family). We're compiling some paperwork and records for our Attorney for him to work on when he gets back. Below I'll explain our situation and maybe can get some guidance from you folks:
Location: Cheyenne, WY
Business Structure: Wyoming LLC
Question: unpaid debt (do we charge interest) from a deceased member of the LLC

Our LLC is an equal 3-way partnership with 3 members. The business is commercial real estate (which is rented out to a trucking firm). On April 2nd, 2018. We had a substantial parking lot paving job completed. The bill was $90,000. Each party was to pay their 3rd ($30,000). 1 partner himmed/hawed and gave excuses why he couldn't pay at the time (but would pay later), so the other 2 partners paid the entire bill ($45,000 a piece).

On October 18th, 2018, the 1 partner (who didn't pay) unexpectedly died. The LLC (the 2 surviving members) have filed a claim with his Estate to pay the $30,000. We've had nothing but backlash from the Estate and as of today (May 7th, 2019) have not received a dime.

Question is: Can we (the LLC surviving partners) tack on interest on this unpaid $30k debt? If so, how much interest can be charged and where back in time could a date be set to start accruing interest? Thank you

 

[Zigner]

Did your written loan agreement contain a clause for interest?

 

[army judge]

Hello, first off, we do have an Attorney hired, but currently Mr. XXX JD is on a 20th anniversary cruise with his family
Question: unpaid debt (do we charge interest) from a deceased member of the LLC

Our LLC is an equal 3-way partnership with 3 members. The business is commercial real estate (which is rented out to a trucking firm). On April 2nd, 2018. We had a substantial parking lot paving job completed. The bill was $90,000. Each party was to pay their 3rd ($30,000). 1 partner himmed/hawed and gave excuses why he couldn't pay at the time (but would pay later), so the other 2 partners paid the entire bill ($45,000 a piece).

On October 18th, 2018, the 1 partner (who didn't pay) unexpectedly died. The LLC (the 2 surviving members) have filed a claim with his Estate to pay the $30,000. We've had nothing but backlash from the Estate and as of today (May 7th, 2019) have not received a dime.

Question is: Can we (the LLC surviving partners) tack on interest on this unpaid $30k debt? If so, how much interest can be charged and where back in time could a date be set to start accruing interest? Thank you

I suggest you wait until your attorney returns.

Your attorney knows your case, and is the ONLY one you should ask questions relevant to the aforementioned legal matter.

It is unethical and a breach of our canons of ethics for ME (a licensed attorney) to say anything to you about the aforementioned legal matter.

I wish you well.

 

[RichinsCrew]

No loan agreement - there was never a "loan" plus no provisions in our LLC docs that address interest on unpaid debts. the $90,000 was an improvement to the LLC's real estate. Our Operating agreement states that our Managing Member can solely arrange for and pay for improvements. We've done this many times with all 3 members immediately paying their 3rd. Unfortunately, the last go-round the 3rd member died before paying.

$30,000 is owed to the LLC, we're trying to collect but again, question is, can interest be charged and if so...how much?

army judge: surprised at your response. This is an online forum designed for questions to be asked and answered. Again, we're just trying to put together paperwork for our wayward attorney and of course we have a few questions

 

[army judge]

army judge: surprised at your response. This is an online forum designed for questions to be asked and answered. Again, we're just trying to put together paperwork for our wayward attorney and of course we have a few questions

Yes, this is a forum that encourages people to discuss legal issues and concerns.

Rule 4.2: Communication with Person Represented by Counsel



However, I am bound by a Canon of Ethics, which I will never dishonor or breach:

Rule 4.2: Communication with Person Represented by Counsel



Transactions With Persons Other Than Clients
In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order.

 

[RichinsCrew]

Fair enough, Army Judge. If you don't want to participate on this thread due to your ethics, then don't. that shouldn't stop others from chiming in.

 

[army judge]

Fair enough, Army Judge. If you don't want to participate on this thread due to your ethics, then don't. that shouldn't stop others from chiming in.

I thanks you massa, you sho 'nuff bees good to diss old white boy, thank you, massa, thank you!

 

[Zigner]

You need to listen to your attorney. Although you will have non-attorneys reply, the fact is that we aren't going to be able to second- guess your attorney.

 

[adjusterjack]

The LLC (the 2 surviving members) have filed a claim with his Estate to pay the $30,000.

What does that mean? Have you sued the estate or just written a letter? Something else?

$30,000 is owed to the LLC, we're trying to collect but again, question is, can interest be charged and if so...how much?

Does your LLC have an Operating Agreement? Does the Operating Agreement address interest on unpaid debts to the LLC? If there is no Operating Agreement or the Operating does not address interest on debts to the LLC then my guess (for the two cents that it's worth) is that, no, you don't get to collect interest on the $30,000.

However, if you sue the estate and win a judgment there is likely to be post-judgment interest added to the judgment. You can ask for pre-judgment interest in your lawsuit. Whether you get it or not is anybody's guess.

 

[zddoodah]

The legal rate of interest under Wyoming law is either 7 or 10% depending on whether the debt is based on a contract (and assuming that such contract does not provide for a different rate of interest). The accrual date would be the date on which the payment was due but not made. Consult local counsel.

 

[Zigner]

The legal rate of interest under Wyoming law is either 7 or 10% depending on whether the debt is based on a contract (and assuming that such contract does not provide for a different rate of interest). The accrual date would be the date on which the payment was due but not made. Consult local counsel.

That is the legal maximum. One can't just unilaterally assign an interest rate where there was none. In this case, there was never an agreement to charge/pay interest.

 

[zddoodah]

That is the legal maximum. One can't just unilaterally assign an interest rate where there was none. In this case, there was never an agreement to charge/pay interest.

There wasn't? You've read this LLC's operating agreement? Is there a Wyoming statute that says this? I ask because what you wrote certainly isn't the law in every state.

 

[Tax Counsel]

Question is: Can we (the LLC surviving partners) tack on interest on this unpaid $30k debt? If so, how much interest can be charged and where back in time could a date be set to start accruing interest? Thank you

That depends on facts I don't know. Was the $30,000 required by a contribution requirement provision in the LLC charter or operating agreement? If so, what does charter/operating agreement say is the consequence of a missed or late mandatory contribution? If it wasn't made pursuant to a contribution requirement in the LLC governing documents then was there a member agreement to make the contributions? If so, what does that agreement say about this?

I hope you see where I am going with this. It's important to know agreement it is that requires the member to make that payment and what the terms of that agreement were. If there was no provision for interest you'd need to find some provision of Wyoming law that imposes interest in the absence of an interest provision in the agreement itself. While I've not researched Wyoming law on that, I'd be surprised if it had such a provision since parties are free to agree to interest free arrangements if they wish. You'll really need to ask your lawyer about that when your lawyer returns.

 

[Zigner]

There wasn't? You've read this LLC's operating agreement? Is there a Wyoming statute that says this? I ask because what you wrote certainly isn't the law in every state.

While I have not read the agreement, it stands to reason that the OP read it thoroughly prior to signing it and would have mentioned it if such a thing were included in the operating agreement. Having said that, I will concede that people often don't read and/or understand when they sign things.