We have a toxic investor whom we don't have the money to buy out. Our books are such that it would not be unreasonable for us to declare bankruptcy. The question is Chapter 11 or Chapter 7 -- how do we get rid of her? We hope to bring on new investors, but it's proving impossible with her in the mix. She actively disrupts our business.
Country relating to Question: United States
Thank you for the post, I am happy to assist you by answering your questions. In what way is the investor toxic?
WE have a small but beloved magazine (by readers and investors). She called our printer and told them we were going bankrupt (we're not.) and would not be able to pay our print bill and suggested they get 100 percent payment upfront. Our contract calls for 50 percent upfront, 50 percent on d delivery. This has slowed the printing of the magazine, which prevents us from being able to collect from advertisers and sell the magazine through our distributor. Secondly, she did a similar thing with a string of advertising sales people -- telling them that wee were going bankrupt, they should look for new jobs and she would help them. We have a civilian klegal judgement against her -- a peace bond -- because of her harassment of our publisher. (One fun thing she did: called our insurance agency to take out a new policy on the publisher "in case something happened to her." That was a major part of the case).We got into bed with her before we really knew who she was, and how she operated. We have found other potential investors reluctant to get invovled because she is involved -- and anyone within her realm can end up in her sites at any time. So. Toxic enough?
Thank you, XXXXX XXXXX can sue her claiming tortious interference with business opportunities as well as breach of fiduciary duty (as she has a duty to aid the business, not defame it or otherwise take actions against it causing its viability to be in question, whether real or perceived). Please let me know if you need additional guidance.
We don't have the money for a lawsuit -- and that doesn't rid us of her. Since we dont have the money to buy her out, we are considering bankrupting the company -- but: we plan to continue publishing, ideally under the same name. The question is is there a way to get rid of her under reorganization if we go Chapter 11 (buy her out at a lower rate?), or is our only hope to dissolve the company, and start a new one?
Your only hope would be to dissolve the company, a bankruptcy does not serve to oust members, only allocate the business finances to pay creditors.
and one more... thank you: we have never trademarked our magazine -- we tried but couldn't, the title is too common a word. But because it's not trademarked that also means we CAN dissolve the company and create a "new" magazine without the investor -- exactly the same, name and everything because none of it is protected. Does that expose us in any way legally? That would actually be our ideal scenario. We don't have a non-compete agreement with the Inc. or LLC. We don't have many assets to sell (the assets are simply the staff).
Yes, the investor can sue claiming that the dissolution was an attempt to oust the investor without compensation for her shares in the company. IF the shares have no value, it would be an easier solution than if her shares have value.
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