Who has standing to bring claim when single-member LLC is dissolved?
Typically, an LLC’s status as a distinct legal entity means that the members have no interest in specific LLC property. Any legal cause of action must be brought by the LLC. However, what happens when a single-member LLC has been dissolved? Can the member bring an action in his individual capacity to recover on a contract entered into by the LLC? Yes.
In Bowers v. Estate of Mounger (Tenn. Ct. App. June 29, 2017), the Court of Appeals reversed the trial court’s dismissal based on lack of standing, holding that because the LLC Act does not prohibit the sole member from assigning LLC property to himself as part of wind-up and dissolution, the member’s assignment of the rights under the contract was valid, and the member had standing to sue the other party in the LLC’s contract. Therefore, the former single member, in his individual capacity, could bring the breach of contract suit as an assignor