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Richard
Richard, Attorney
Category: Business Law
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Experience:  32 years of experience practicing law and a businessman.
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I and another person both own 50% of a California S corp. I

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I and another person both own 50% of a California S corp. I learned he was spending excessive company money on personal items and working deals with clients to embezzle money on the side. When I found out I confronted him and made him an offer to buy him out. He sent me an email agreeing to take the offer two months ago. The offer included a non solicit clause. Now as we get to closing he is unwilling to cooperate or take the deal. We are a small company. We have about 20K in credit card debit that I am the only personal guarantor on, we also owe approximately 100K to various vendors and are in a 2 year lease at 8K a month. The lease is also personally guaranteed

I have been operating the business with no involvement or communication from him fro the past two months.

We have no bylaws in place. I am CEO and treasurer, he is secretary.

I want out. My partner is in no position to buy me out nor can he be trusted to handle the company on his own. I need to clear all of the debit and close the doors. How can I do this with a non cooperative and untrustworthy 50% partner.
Submitted: 3 years ago.
Category: Business Law
Expert:  Richard replied 3 years ago.

Good morning. You have all the leverage here. He violated his fiduciary duty by usurping corporate opportunity, by using corporate funds for his own personal uses, and by otherwise embezzling money. You have both criminal and civil recourse. You shoudl tell him that he can either agree to the surrender his ownership to you on such terms as you request or you will: i) file a civil suit against him to recoup all the damages his actions have caused, including punitive damages for fraud; and ii) contact the district attorney's office to pursue criminal charges for fraud, embezzlement, and theft. Your civil suit will result in a judgment award that if he cannot pay, you can then lien his stock in the company and take in partial satisfaction of the judgment. Given his downside certainty, I feel certain he will agree with your terms without you having to follow through, but if not, pursue your actions against him.

 

 

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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

Richard, Attorney
Category: Business Law
Satisfied Customers: 47025
Experience: 32 years of experience practicing law and a businessman.
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