Free entity

[ILLMAS]

What are your thoughts on this scenario:

Person A was speaking to a colleague that is in the same industry about opening a business on his own, it so happens that the colleague formed an LLC (1065, no election to S status) a couple years ago that was never officially finalized.  The business is incorporated, has a FEIN and a operating agreement with the other members and it is being kept in good standing by the attorney.   The business was never opened because the other members just disappeared and never put in capital, the colleague offered to give him the LLC and to just change everything to A’s name etc.....  A is seriously considering it since the LLC name fits perfectly for the industry he is in and he will also have business partners.  For those that might have experience what are the pros and cons of accepting the freebie or any other advice.

Thanks

[Medlin Software, Dennis]

The person who is already a partner may be comfortable with some sort of reworking.  A potential new partner might not be comfortable without investigating current status.  (Nothing is free...)

So personally, I would setup a new entity, with the new partners, even if there has to be a slight variation on the "legal" name.

My experience comes from resurrecting a long ignored social club (started in the early 1900's).  I became involved in the 80's, and would not be part of the board until there was a revived corp (MC club, putting on events, substantial liability).  Attorney said it was crazy to revive - even if complete books and documents were avaailable - and instead, started new, with a very slight change in the corp name.

[Lion EA]

You don't know what could be attached to that LLC, even if inaccurate, especially with missing partners. Person A can ask his colleague to dissolve it with the state -- if in your state that would free up the name. Then Person A can form a brand new LLC, choosing the now open name.