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Abstract

The limited liability company (LLC) has become the preeminent choice of entity for small and midsize businesses, but it suffers from some of the same problems as its older cousins, the close corporation and the partnership. One such problem is oppressive conduct directed at the minority in interest. This article examines claims of oppression brought by members of limited liability companies, with a special focus on the Illinois Limited Liability Company Act (ILLCA). The ILLCA only provides one remedy for oppression—dissolution and wind-up of the LLC. This sole remedy may be inadequate, given that courts have historically been reluctant to order dissolution, and oppressed members may prefer a less harsh remedy. The oppression provision of the ILLCA looks even barer when contrasted with the statutory remedies available to shareholders of close corporations. The Illinois Business Corporation Act (IBCA) offers oppressed shareholders a non-exhaustive list of twelve different remedies. This article argues that, from a policy standpoint, oppressed members of LLCs are just as vulnerable as their oppressed shareholder counterparts, and the ILLCA should be amended to clarify members’ rights and provide greater protection through additional remedies. In the absence of an amendment, courts should nonetheless look to the IBCA for guidance and be willing to craft equitable remedies for oppression. Greater protection and well-defined legal rights will make investors and business-owners feel more secure, and draw business to Illinois.

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