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Roger
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Category: Business Law
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What are our legal options / rights if a partner broke the

Customer Question

What are our legal options / rights if a partner broke the partnership agreement, where we both agreed to be active working partners 50/50 and 1 hasn't worked in over 1 year in the business. In fact the partner went ahead and started working for another company?

We spoke with a realtor to sell the business, and received received an estimate of 20K, we offered the partner 40K to leave and they still decline, even thought they do not want to do anything in the business.

They have decided that they will become a silent partner and we do not want one or need one.

What do we do, what can we do legally to relinquish them from the partnership?

Thanks
Submitted: 1 year ago.
Category: Business Law
Expert:  Roger replied 1 year ago.

Hi - my name is XXXXX XXXXX X'X a Business litigation attorney. Thanks for your question.

 

In order to remove the person from the partnership, you will likely have to sue for dissolution of the partnership, and also for breach of fiduciary duty to you and to the partnership for his/her failure to perform as required.

 

If you have a written partnership agreement, you need to review it and see what it says about removing a partner and any instructions for dissolution. Under California law, the partner is entitled to be bought out for the fair market share of their partnership interest at the time of expulsion/dissolution.

 

Thus, if your partner will not voluntarily bow out and turn his/her interest over to you, or if you can't negotiate a buyout, then only thing you can do is sue and force the dissolution and buy th partner out.

 

Please let me know if you have any additional questions. Thanks.

Customer: replied 1 year ago.
The partner suggested to become a silent partner where they could still use the business to pay for car lease, phones, and addiotional expensess while Figure the true value of the business (the partner want me to revive the business while the partner is still not going to involved in any way shape
Or form!!!)

I do not want to continue another day the way it is (this partner been receiving paycheck every month while never step a foot in the business for over a year now and I do not want to continue this any longer

I spoke with realtor and since we don't show profit at the moment we could maybe get about 20k total for key money since its a good location, that 20k minus realtor fees = 10k total (5k) each

We offered them 40k as we are in debt of 80k
Total, so we offered to take over the business including the 80k debt and they let us be, they don't want they and want to if we revive the business in the next few months, again while the partner is silent (not going to do anything!!!!

Can we force the partner to exit effective immediately ???
I do not want this to continue 1 more day

What do I need to do?
What is my next step legally speaking?

Thank you
Expert:  Roger replied 1 year ago.

You need to file your lawsuit to dissolve the partnership and for breach of fiduciary duty first.

 

In order to get the partner to be immediately removed, you would have to file a motion for a temporary injunction in your lawsuit to stop any additional payments to this person and also for an order for him to stay off of the premises until a final hearing on the matter. You would have to be able to prove that harm will occur to the business unless the injunction is granted.

 

That's about as fast as you could get something done. How fast this will actually happen depends on how quickly you can get to a local attorney and get your lawsuit filed.

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