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MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25285
Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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Relist Inaccurate answer. i borrowed from a friend 60,000

Customer Question

Relist: Inaccurate answer. i borrowed from a friend 60,000 i told her i am trying to get into a business franchise and i was needing that required amount. she only gave me the money under the following circumstances which we sign a contract she created which was notarized at a local bank -she would be payed 1000 dollars every month from the business until the business is sold or bankrupt. -the 60,000 would be charged 15 percent intrest and will be payed back in 18 months -and she has half ownership of the business, and annual profits get half of the earnings. After talking over and agreeing to the requirments of getting the money i signed the paper which i have a copy of and she gave me a check for the 60,000. all i asked was for the money, i did not want any business partnership with the loan shark. so i still used the money and bought over the franchise but i let my half brother sign the business paperwork as president, and legally through the S corporation my half brother established i have 95 percent shares of he business. now i just told the loan shark i gambled out the money and i wasnt able to get into business anymore, i agreed to pay her back and have been on a regular basis. i am not trying to rip her off in any way. if she gets a lawyer and trys to sue me for business profits, because i do have a business persoanlly i run everything , but legally its under my half brothers name and social, but i have shares in the corporation. can she get any money, is my business in jeapordy?
Submitted: 6 years ago.
Category: Business Law
Expert:  MShore Law replied 6 years ago.
Thank you for the post, yes your business in jeopardy. This is because she can allege that your arrangement with your half brother is a sham arrangement designed to defraud her as a creditor and consequently pierce the corporate veil of the S-Corp that was established.
Customer: replied 6 years ago.
Relist: Answer quality.
so would it be a good choice to amend and sell my shares to my brother so i am out of the business corp legally?
Expert:  MShore Law replied 6 years ago.
Yes, it would. That way there would not be the allegation of fraud.