A 50/50 limited liability company can be an attractive business structure when two owners want equal economic participation and equal authority over the company. The arrangement can work well while the members agree on the direction of the business. But when the relationship deteriorates, the very equality that once seemed fair can become the source of a serious problem. Neither member has enough voting power to control the company, important decisions cannot be made, and the business may become trapped between two owners who no longer trust one another.
Michigan law provides potential remedies for an LLC that reaches this point, but there is an important distinction between a deadlock and member oppression. A deadlocked member may be able to seek judicial dissolution of the LLC. A member who proves illegal, fraudulent, or willfully unfair and oppressive conduct may have access to a much broader group of remedies, including a judicially ordered purchase of the member’s interest at fair value. These remedies arise under different provisions of the Michigan Limited Liability Company Act and require different showings. ¹
For owners of closely held businesses in Detroit, Ann Arbor, Oakland County, Washtenaw County, Wayne County, and elsewhere in Michigan, understanding this distinction can determine whether a business survives an ownership dispute, whether one member is bought out, or whether the company ultimately must be wound up.
An LLC’s operating agreement is ordinarily the starting point for determining the rights of its members. The Michigan Limited Liability Company Act defines an operating agreement broadly as the written agreement among the members concerning the affairs of the LLC and the conduct of its business, and the definition can include relevant provisions contained in the articles of organization. ¹ The operating agreement may determine who manages the business, what decisions require member approval, how voting power is allocated, how distributions are made, and whether one member can buy the other member’s interest when a dispute arises.
Michigan law also gives members substantial flexibility in allocating voting rights. An operating agreement may establish the voting rights of the members and may even provide that particular members have limited or no voting rights. If the operating agreement does not address voting rights, the Michigan LLC Act generally provides that each member has one vote. Unless the Act or the governing documents require something different, a majority in interest ordinarily is necessary to approve a matter submitted to the members. ²
That structure creates an obvious problem in a two-member LLC with equal voting rights. If Member A votes yes and Member B votes no, there is no majority. If the disagreement concerns a minor operational issue, the members may simply continue doing business while they attempt to resolve it. If the disagreement concerns borrowing money, replacing a key employee, making a substantial capital expenditure, entering a major contract, selling property, making distributions, admitting another owner, or changing the company’s strategic direction, the inability to obtain the necessary vote can become much more serious.
A personal disagreement between owners, however, is not necessarily a legal deadlock requiring dissolution. Two members can dislike each other intensely and still operate a profitable company. The legal question is ordinarily whether their disagreement has reached the point that the LLC cannot conduct its business as contemplated by its articles of organization and operating agreement.
The Michigan Limited Liability Company Act identifies several events that can result in dissolution, including an event specified in the articles or operating agreement, unanimous member approval, and the entry of a decree of judicial dissolution. ³ A 50/50 LLC therefore does not automatically dissolve simply because the two members disagree. Unless the operating agreement itself contains an applicable dissolution or deadlock provision, a member seeking court intervention ordinarily must establish a statutory basis for judicial dissolution.
That basis appears in MCL 450.4802. The statute provides that, upon application by or for a member, the circuit court for the county in which the LLC’s registered office is located may decree dissolution whenever the company is unable to carry on business in conformity with its articles of organization or operating agreements.⁴
The statutory language is important. Michigan’s LLC dissolution statute does not simply say that a court may dissolve an LLC whenever the members are unhappy with each other or whenever they have reached an impasse. The focus is on whether the company is unable to carry on its business in conformity with its governing documents.
The Michigan Court of Appeals addressed this concept in Jode Investments
LLC v Burning Tree Properties, LLC. Although Jode Investments is unpublished and therefore not binding precedent in the same manner as a published appellate decision, the decision provides useful guidance concerning the application of MCL 450.4802. The Court explained that a trial court has discretion to dissolve an LLC when the company is unable to carry on its business in conformity with its articles or operating agreement, and that dissolution may be justified where the members are so deadlocked that the company is unable to carry on its business.⁶
This means the evidence supporting dissolution should ordinarily demonstrate more than disagreement. A stronger dissolution case exists when deadlock prevents the company from making decisions that must be made for the business to function. A company that cannot approve expenditures, execute necessary financing, establish compensation, make required capital decisions, authorize significant contracts, manage company property, or otherwise perform the business contemplated by the operating agreement presents a materially different situation from an LLC whose members simply disagree over management style.
The company’s financial condition can therefore be relevant, but profitability does not necessarily resolve the issue. A company may remain profitable temporarily while its governance structure has become dysfunctional. Conversely, a company may be losing money without being legally deadlocked. The central inquiry under MCL 450.4802 remains whether the company can carry on business in conformity with its governing documents.⁴
One of the most important misconceptions concerning a 50/50 Michigan LLC is that a court will simply order one member to purchase the other member whenever the owners cannot get along. Michigan law does not create a universal statutory buyout right merely because an LLC is deadlocked.
MCL 450.4802 expressly authorizes the circuit court to decree dissolution when its statutory standard is satisfied.⁴ It does not expressly provide that, instead of dissolving the LLC, the court may require one innocent 50% owner to purchase the other innocent 50% owner’s membership interest at a judicially determined value.
A buyout may nevertheless arise through an operating agreement, settlement, or another statutory claim. Many sophisticated operating agreements contain provisions specifically designed for this situation. They may establish appraisal procedures, rights of first refusal, mandatory mediation, a buy-sell process, a mechanism allowing one owner to name a price at which the other must either buy or sell, or another procedure for separating owners without destroying the underlying business.
Where the agreement does not contain such a mechanism, Michigan’s member-oppression statute becomes especially important because that statute expressly authorizes a court-ordered purchase at fair value. But the oppression statute carries requirements that are different from the requirements for judicial dissolution.
MCL 450.4515 permits a member to bring an action against managers or members in control of an LLC when their acts are illegal, fraudulent, or constitute willfully unfair and oppressive conduct toward the company or the member. If the statutory grounds are established, the circuit court has broad authority to grant appropriate relief. Among the remedies expressly identified in the statute are dissolution and liquidation, cancellation or alteration of provisions in the articles or operating agreement, orders directing or prohibiting acts by the LLC or its members or managers, the purchase at fair value of the complaining member’s interest, and an award of damages.⁵
The judicial buyout remedy is therefore real and potentially powerful. But it is a remedy for proven wrongful conduct under MCL 450.4515, not simply a remedy for two members who have reached an honest disagreement over how the business should operate.
The statute defines “willfully unfair and oppressive conduct” as a continuing course of conduct, a significant action, or a series of actions that substantially interferes with the interests of a member as a member. The statute also makes clear that conduct authorized by the articles of organization, the operating agreement, another agreement to which the member is a party, or a consistently applied written company policy ordinarily does not constitute willfully unfair and oppressive conduct.⁵
This places substantial importance on the operating agreement. A business decision that one owner considers unfair may nevertheless be authorized by the agreement. Conversely, disregarding voting rights, distribution rights, information rights, or other rights granted under an operating agreement may become evidence supporting an oppression claim.
Michigan’s Supreme Court has emphasized in the analogous shareholder-oppression context that the focus is on interference with ownership interests and that the statutory remedy is equitable in nature. In Madugula v Taub, the Court examined Michigan’s substantially analogous corporate oppression statute and recognized the broad equitable role of the court in determining both whether oppression occurred and what relief is appropriate.⁷ Those principles are important when considering the similarly structured remedies available to LLC members under MCL 450.4515.
The distinction between dissolution and oppression becomes particularly important when there are exactly two equal members.
MCL 450.4515 applies to wrongful acts committed by “managers or members in control” of the LLC.⁵ In the traditional oppression case, that requirement is easily understood. One member owns 70% of the company, controls the vote, removes the minority member from management, stops distributions to the minority member while diverting money to himself, and denies the minority member access to company information. The majority owner plainly exercises control.
A true 50/50 structure may be different. If neither member possesses greater voting authority, neither member necessarily has the ability to dominate the other through the voting process. That can make a statutory oppression claim more difficult even though the members are hopelessly deadlocked.
The Michigan Court of Appeals’ January 2026 decision in Morgan v Meyers illustrates the problem. The two owners were equal members of a professional limited liability company. The trial court dismissed the plaintiff’s member-oppression claim because the defendant did not control the company; rather, the parties were equal members. The Court of Appeals ultimately affirmed the relevant summary-disposition rulings. ¹⁰ The case is unpublished, but it is particularly instructive for owners of a genuine 50/50 Michigan LLC because it demonstrates that equal ownership should not automatically be treated as the equivalent of statutory control.
That distinction can have major strategic consequences. If two equal members are simply unable to agree, the stronger statutory theory may be dissolution under MCL 450.4802 rather than oppression under MCL 450.4515. A party should not assume that labeling the other member’s conduct “oppressive” automatically creates a right to a judicial buyout.
At the same time, ownership percentage should not be confused with the practical realities of every LLC. An operating agreement might designate one 50% owner as the manager and provide that the manager controls significant aspects of the company’s operations. One member might also gain practical control over the company’s bank accounts, accounting system, customer relationships, records, payroll, employees, or other essential functions. Whether those circumstances satisfy the statutory requirement must be evaluated based on the governing documents and the actual facts rather than ownership percentages alone.
The difference between deadlock and oppression can sometimes be seen by comparing two situations.
Suppose two 50% members disagree over whether the company should expand into another market. Both have access to the books. Both receive equal distributions. Both participate in management. Neither is diverting company assets. They simply have fundamentally different business judgments about what the company should do next. That situation may create a serious deadlock, but it does not necessarily establish oppression.
Now suppose one member responds to the dispute by removing the other from the company’s bank accounts, changing passwords, withholding financial information, transferring company money into accounts that only one member can access, paying himself excessive compensation, claiming that the other owner’s membership interest no longer exists, or withholding distributions while continuing to receive personal economic benefits from the company. The dispute has now moved beyond disagreement about business judgment. Depending on the circumstances and the issue of control, those actions may support a claim under MCL 450.4515.
The Michigan Court of Appeals’ 2025 decision in Khabra v Madahar provides a useful illustration. There, the Court affirmed relief after conduct that included removing members from company bank accounts, changing the company’s registered address, revoking access to accounting records, filing documents identifying one defendant as the sole owner, transferring substantial company funds to separately controlled accounts, increasing personal compensation, paying personal expenses from company funds, withholding distributions, and excluding the other members from operations. The trial court ultimately ordered a purchase of the plaintiffs’ membership interests and awarded additional monetary relief, and the Court of Appeals affirmed the member-oppression determination.⁹
Khabra demonstrates why the factual record is so important. The case was not merely about owners who disagreed. The court examined concrete actions affecting ownership, financial, informational, and management interests.
When oppression is proven, MCL 450.4515 expressly permits the court to order the purchase of the affected member’s interest at fair value.⁵ The valuation of a closely held LLC can then become one of the most significant issues in the litigation.
Closely held businesses do not have publicly traded shares, establishing an observable daily market price. Their value may depend on revenue, earnings, customer concentration, tangible assets, intellectual property, contracts, debt, management compensation, real estate, future business prospects, and the extent to which the company’s results depend on one particular owner.
The valuation date can also matter. A business worth $4 million before the members’ relationship collapses may be worth substantially less after customers leave, key employees depart, or litigation disrupts operations. A party accused of oppressive conduct may not be permitted to obtain the benefit of value destruction caused by that same conduct without the court considering the appropriate equitable consequences. Conversely, the existence of litigation does not justify inflating an interest above what the evidence demonstrates it is worth.
Khabra illustrates the importance of valuation evidence. The trial court relied substantially on expert valuation evidence and a court-appointed receiver in determining the value associated with the ordered purchase, and the Court of Appeals upheld the resulting remedy.⁹
For that reason, an LLC deadlock case that may result in a buyout often becomes as much an accounting and valuation dispute as a legal dispute. Financial statements, general ledgers, tax returns, accounts receivable, owner compensation, related-party transactions, debts, customer agreements, property values, and normalized earnings can all become critical evidence.
Owners also should not wait indefinitely while oppressive conduct continues.
In Frank v Linkner, the Michigan Supreme Court interpreted the limitations provision governing damages claims under MCL 450.4515. The Court held that an LLC member-oppression claim for damages accrues when the manager substantially interferes with the plaintiff’s interests as a member, even if the plaintiff has not yet suffered a calculable financial injury.⁸
That principle can be significant in closely held company disputes. An owner who has been denied voting rights, subordinated economically, excluded from rights granted under an operating agreement, or otherwise subjected to actionable interference should not necessarily assume that the limitations period begins only after money is lost or after the business is ultimately sold.
The precise limitations analysis may also depend on the particular relief requested. MCL 450.4515 expressly provides its shorter limitations provisions for an action seeking an award of damages, while other equitable relief can involve additional limitations questions.⁵ Those issues should be evaluated early rather than after negotiations have continued unsuccessfully for several years.
Dissolution should not be confused with simply closing the doors the day a judgment is entered. Dissolution ordinarily begins the winding-up process.
Michigan’s LLC Act treats a judicial decree as an event of dissolution. ³ From there, company affairs must be wound up. Assets may need to be collected or sold, obligations addressed, accounts reconciled, claims resolved, contracts completed or terminated, and remaining value distributed according to the company’s governing documents and applicable law.
For a successful operating business, that may be economically painful. A functioning company can have substantial going-concern value that would be lost if its assets were sold separately. Customer relationships, trained employees, reputation, contracts, trade names, goodwill, and operational systems may be worth substantially more as part of an operating enterprise than they would be through piecemeal liquidation.
That economic reality is one reason the possibility of dissolution often drives serious settlement discussions. Even where one member believes that dissolution is legally justified, both owners may ultimately be financially better off if one acquires the other’s interest and the enterprise continues operating.
But the possibility of a negotiated buyout should not be confused with an automatic judicial right to one. Where the case involves nothing more than equal owners who are genuinely deadlocked, MCL 450.4802 provides a statutory path toward dissolution.⁴ A compelled fair-value purchase is expressly identified in MCL 450.4515 when the requirements for member oppression are established.⁵ The legal theories therefore should be analyzed separately.
Member oppression litigation also does not create a binary choice between doing nothing and liquidating the company. MCL 450.4515 intentionally provides the circuit court with broad equitable authority.
If oppression is established, the court may alter or cancel a provision of the operating agreement, direct or prohibit certain acts by the company or its members or managers, order a fair-value purchase, award damages, or order dissolution.⁵ This flexibility can be particularly important when the underlying company remains profitable and viable despite the breakdown between the owners.
For example, the real dispute may concern access to financial records, distributions, owner compensation, authority over company accounts, or a particular self-interested transaction. Correcting that conduct may protect the complaining member without requiring liquidation. In another case, however, years of hostility may have destroyed any realistic possibility of joint management, making a separation of ownership the only practical solution.
The appropriate remedy therefore depends not merely on whether misconduct occurred, but on what relief will fairly address the consequences while respecting the parties’ contractual and statutory rights.
Before filing litigation over a 50/50 LLC, the company’s documents and financial history should be reconstructed carefully.
The operating agreement is usually the most important document because it defines the business relationship the court will be asked to enforce. The articles of organization, amendments, member resolutions, tax returns, financial statements, bank records, capital-account records, loan documents, compensation records, distribution history, company emails, text messages, and prior written agreements can also reveal whether a genuine deadlock exists and whether one member has crossed the line from disagreement into exclusion or self-dealing.
The history of the parties’ actual decision-making can also matter. If the operating agreement is silent on a particular issue, years of consistent practice may help explain how the members operated the company. If both members historically approved major expenditures but one suddenly begins making them unilaterally, that change may be significant. If one member has always managed day-to-day operations with the other member’s consent, continued exercise of that authority may have a very different legal character.
The litigation strategy should therefore begin with the question the statute actually asks. For dissolution, can the company continue carrying on the business in conformity with its governing documents?⁴ For oppression, is the challenged defendant a manager or member in control, and has that person committed illegal, fraudulent, or willfully unfair and oppressive acts that substantially interfere with the plaintiff’s interests as a member?⁵
Those are related questions, but they are not interchangeable.
Even when litigation has begun, many 50/50 disputes ultimately resolve through a negotiated purchase rather than liquidation.
The economics often favor that result. One member may understand the business, maintain important customer relationships, possess necessary licenses, or simply want to continue operating the company. The other may prefer liquidity and freedom from a relationship that has become unworkable. If a credible valuation process can establish a defensible price, a voluntary transaction may preserve significantly more value than winding up the company.
The difficulty is usually agreeing on price and terms. The member who wants to remain may emphasize liabilities, customer risk, debt, future capital requirements, and the departing member’s reduced role. The member who wants to leave may emphasize historical profitability, goodwill, future earnings, and the economic value of allowing the remaining owner to obtain complete control. Those differences are why independent valuation professionals frequently become important.
Payment structure can be equally significant. A profitable LLC may have substantial value without enough cash to fund an immediate purchase of half of the company. A negotiated transaction may therefore require financing, installment payments, security interests, guarantees, escrow arrangements, restrictions on distributions, or other protections.
The parties must also resolve matters beyond the purchase price, including company debt, personal guarantees, tax treatment, access to historical records, pending litigation, confidentiality, restrictive covenants where enforceable, customer communications, and mutual releases.
The most cost-effective time to address a 50/50 deadlock is when the LLC is created and the members still trust one another.
A well-drafted operating agreement can define which matters require unanimous approval and which may be decided by one member or a designated manager. It can establish escalation procedures if the members disagree. It can require mediation before litigation. It can identify an independent director, manager, adviser, or tie-breaking mechanism for specified operational disputes. Most importantly, it can provide a clear exit process.
Without such provisions, the owners may find themselves asking a circuit court to determine whether their dispute satisfies MCL 450.4802, whether either member is sufficiently “in control” for purposes of MCL 450.4515, whether alleged conduct constitutes oppression, and what equitable remedy should follow. Those questions can require extensive discovery, expert testimony, motion practice, and trial.
The recent Morgan v Meyers litigation demonstrates the risk particularly well. Two equal owners can have a dysfunctional relationship and ultimately dissolve their business without necessarily establishing that one of them was a controlling member capable of statutory oppression. ¹⁰ That distinction should be considered when drafting every two-member Michigan LLC operating agreement.
For a Michigan business owner confronting a 50/50 dispute, the first question should not simply be, “Can I force my partner to buy me out?” The better question is what legal and contractual rights arise from the particular facts.
If both members retain genuinely equal control but cannot obtain the votes necessary to operate the company as required by the operating agreement, judicial dissolution under MCL 450.4802 may provide the clearest statutory remedy. Jode Investments confirms that sufficiently severe member deadlock can support dissolution when the company is unable to continue carrying on its business.⁶
If one member or manager has gained control and is using that control to exclude the other owner, interfere with member rights, divert financial benefits, deny information, manipulate distributions, or otherwise engage in conduct meeting the requirements of MCL 450.4515, the case may support an oppression claim and the broader equitable remedies accompanying it. Among those remedies is the court’s express authority to order the purchase of the affected membership interest at fair value.⁵
And in some disputes, both theories may be relevant. The relationship may begin as a legitimate disagreement, develop into operational paralysis, and eventually lead one owner to take unilateral actions that create separate claims. Careful factual and legal analysis is necessary before determining which remedies should be sought.
A 50/50 Michigan LLC can become exceptionally difficult to manage once its owners lose the ability to cooperate. Equal ownership prevents either member from simply outvoting the other, but Michigan law does not automatically resolve that impasse by forcing one owner to purchase the other.
Michigan’s LLC Act instead provides distinct paths. MCL 450.4802 permits judicial dissolution when the LLC is unable to carry on its business in conformity with its articles of organization or operating agreement.⁴ MCL 450.4515 addresses illegal, fraudulent, or willfully unfair and oppressive conduct by managers or members in control and gives the circuit court substantially broader remedial authority, expressly including a purchase of the affected member’s interest at fair value.⁵
For exactly equal owners, the distinction can be critical. As Morgan v Meyers illustrates, a 50/50 member may have difficulty establishing the statutory “control” necessary for member oppression merely because the relationship has broken down. ¹⁰ At the other end of the spectrum, cases such as Khabra v Madahar demonstrate that when an owner actually assumes control and uses it to exclude other members from the company’s finances, records, distributions, and operations, Michigan courts have substantial authority to fashion relief, including a forced buyout.⁹
The operating agreement therefore remains the most important document in many ownership disputes. It defines how decisions are supposed to be made, identifies the parties’ rights, and may provide an exit mechanism that avoids the uncertainty and expense of judicial dissolution. When no adequate contractual solution exists, Michigan’s dissolution and oppression statutes provide important but meaningfully different ways of ending an ownership relationship that can no longer function.
Because the legal remedy depends heavily on the operating agreement, ownership structure, management provisions, actual exercise of control, and history of the members’ conduct, Michigan business owners facing a serious LLC deadlock should evaluate those issues before taking unilateral action that could affect company assets, distributions, records, employees, or control of the business.
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Sources:
1- Michigan Limited Liability Company Act, MCL 450.4102, defining, among other terms, “operating agreement,” “membership interest,” and “majority in interest.” https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-450-4102
2- Michigan Limited Liability Company Act, MCL 450.4502, governing members’ voting rights and permitting operating agreements to establish and allocate voting rights. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-450-4502
3- Michigan Limited Liability Company Act, MCL 450.4801, identifying events that result in dissolution and winding up of a limited liability company. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-450-4801
4- Michigan Limited Liability Company Act, MCL 450.4802, authorizing a circuit court to decree dissolution when the company is unable to carry on business in conformity with its articles of organization or operating agreement. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-450-4802
5- Michigan Limited Liability Company Act, MCL 450.4515, governing illegal, fraudulent, and willfully unfair and oppressive conduct and authorizing dissolution, equitable relief, a fair-value purchase, and damages in appropriate circumstances.
https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-450-4515
6- Jode Investments, LLC v Burning Tree Properties, LLC, unpublished per curiam opinion of the Michigan Court of Appeals, issued April 17, 2014 (Docket No. 310957), recognizing that severe member deadlock may justify dissolution under MCL 450.4802 when the LLC cannot carry on its business. https://www.courts.michigan.gov/4a7ff9/siteassets/business-court-opinions/c16-2011-291-cz(oct-9,-2014).pdf
7- Madugula v Taub, 496 Mich 685; 853 NW2d 75 (2014), addressing Michigan’s analogous shareholder-oppression statute and the equitable nature of statutory oppression remedies. https://law.justia.com/cases/michigan/supreme-court/2014/146289.html
8- Frank v Linkner, 500 Mich 133; 894 NW2d 574 (2017), addressing LLC member oppression under MCL 450.4515 and holding that a damages claim accrues when the member’s interests as a member are substantially interfered with, even before calculable financial injury occurs. https://law.justia.com/cases/michigan/supreme-court/2017/151888.html
9- Khabra v Madahar, unpublished per curiam opinion of the Michigan Court of Appeals, issued August 21, 2025 (Docket No. 368447), affirming a member-oppression determination and a remedy requiring purchase of membership interests at fair value. https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2025/368447.html
10- Morgan v Meyers, unpublished per curiam opinion of the Michigan Court of Appeals, issued January 21, 2026 (Docket No. 370503), involving two equal members and reflecting the significance of the statutory requirement that an oppression defendant be a manager or member “in control” of the LLC. https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2026/370503.html