How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Roger Your Own Question
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 30909
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
Type Your Bankruptcy Law Question Here...
Roger is online now
A new question is answered every 9 seconds

Our company principals have signed on a joint and ...

Customer Question

Our company principals have signed on a joint and several loan for a large amount. Unfortunately, our company has become insolvent and we will be defaulting on the loan. One partner will likely have to pay for loan because of his net worth. What are the chances of him suing the rest of the partners or just one partner for the loans. We do not have an agreement that indeminifies him or anything in the operating agreements that suggest partners will indeminfy each other.
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 8 years ago.

If the loan is joint and several as to all partners, one partner has the right to pay off the loan and seek reimbursement from the other partners. It is likely that the company's operating agreement states something to this effect with regard to profit and loss sharing or about debts incurred by the company.

Unless the corporate by laws state something different, the partner that "bails out" the others has a right to seek contribution and repayment from the others.

Roger and other Bankruptcy Law Specialists are ready to help you
Customer: replied 8 years ago.
There is nothing in the operating agreement of bylaws. Still think the partner has an opportunity to sue?
Expert:  Roger replied 8 years ago.

If the operating agreement is silent on this matter, then you would have to look to the state statute of your state dealing with corporations/llc's/partnerships, or even just basic contract law. I'm not aware of a state that does not give a joint debtor the right to recover money paid on behalf of another.

Related Bankruptcy Law Questions