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 Irwin Law Your Own Question
Irwin Law
Irwin Law, Attorney
Category: Business Law
Satisfied Customers: 6918
Experience:  30+ yrs. representing small business, real estate, probate
18215332
Type Your Business Law Question Here...
Irwin Law is online now
A new question is answered every 9 seconds

Selling a business/Partnership

This answer was rated:

If a business is for sale and partner 1 holds a 90% majority, can he sell the business without partner 2's signature? Can he pay partner No. 2 to get him out of the business before it sells? Partner 2 is ruining the business, is broke and is eating up profits. How do you get out partner 2 of the business even if the business does not sell?  There is no partnership agreement that will show their percentage of interest and nothing in writing to rely on. Can you just pay him the investment he made into this and remove him?  Even pay him more than what he invested to get him out of the partnership now? Thank you


BizIPEsq. :

hello, I will be assisting you

BizIPEsq. :

question: is this a corporation, LLC or partnership?

Customer:

This is a partnership that is not in writing, husband and wife partners, one holds about 6 percent of the business, he failed to come up with the money promised to the seller. The other buyer, his partner, came up with almost all of the money and paid off the seller. He holds about 90 percent ownership. The lease is in his name, the liquor license is in his name and the real estate contract to sell the business is in his name. He wants to make him leave, he is ruining the business. He wants to give him his investment back and even give him more but he wants him out. And if he sells the business, he does not want him involved in the process at all. What can he do?

Customer: replied 3 years ago.
Relist: Other.
He did not give an answer, he asked me a question, went offline and never came back on to answer the question I posted.

Hello. Another expert here. Sorry for the delay in getting back to you. It might have been a computer glitch. Without any written partnership agreement there is no partnership split other than 50-50. Of course the capital contributions would force partner 2 to come up with capital equal to partner 1 before 2 gets any money at all. Frankly, in no. 1s position, I don't know why he doesn't just take over,change the locks and tell 2 he'll settle with him later. Then partner 2 will have the burden of figuring out what to do about it.

I hope this information is helpful and that you will enter a positive rating. I thank you for submitting your question to Pearl-Just Answer. We appreciate your business. If you need clarification or additional information, please send me a Reply and I will be happy to explain further. Please consult a local attorney to verify the accuracy of this information according to your state's laws.

 

Irwin Law, Attorney
Category: Business Law
Satisfied Customers: 6918
Experience: 30+ yrs. representing small business, real estate, probate
Irwin Law and 4 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

Thank you for your response. One more thought. Partner 2 is drinking all the profits, and his wife works there too (she is partners with him). They live on her tips. Can Partner 1 fire her so that it will remove her and him from the business? I agree to shut the doors but if not, fire her, he will not have a reason to come to the restaurant and Partner 1 can pay him something because if she is not working there and is terminated, they need the money. Closing the doors in the height of tourist season is a little hard to do. He just wants him out, his wife out, they are probably taking money from the till and drinking up profits. Thank you so much. Lynn

Customer: replied 3 years ago.

just want to make sure you got my second question to your answer to finalize my case. thank you

Hi Lynn. Thanks for your excellent rating. I just opened up both your replies. Sorry for the delay. Partner 1 doesn't have to shut the doors or close the business. What I meant by "change the locks" was to use "self help" and put them out of the business by physically taking possession of the business and denying them access to it in any way. If you say that he doesn't really run the business day to day and the only contact is his wife working there, then she should be let go immediately. She will probably argue that Partner 1 has no authority, but when she is no longer permitted to enter the premises that settles that until and unless they hire an attorney and sue for whatever they think they're entitled to under CO partnership law. Partner 1 can always deal with them humanely in their compensation later, but if the business is going to be saved, take it away from them now and clean up the legalities later. BTW, this situation occurs more often than you'd think in small businesses.
Irwin Law, Attorney
Category: Business Law
Satisfied Customers: 6918
Experience: 30+ yrs. representing small business, real estate, probate
Irwin Law and 4 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

I appreciate all of your help. I am sure this happens frequently. Partner 2 does not have 5cents to hire an attorney. I would like to buy into this business, become a majority shareholder, reopen with a new name, some class, and do the hiring correctly as an ex HR vp. It is a great opportunity and it will provide people jobs to the small town. I hope it all works out and with your help and guidance it makes it a lot easier....thank you again.....Lynn

It sounds like a plan, Lynn. Good luck to you.