I started a dance studio and dance wear store (brick and mortar) (LLC) with my in-laws six years ago. They put in about $330,000 cash, plus co-signed on a $142,000 business loan
, which was secured by their property. I put in all my expertise, no money. The partnership was split 80 (me) 20 (them), and the goal was to eventually pay off all the capital they had invested and for me to take over the business 100%.
Then, the economy plummeted, and we have struggled for 6 years, barely scraping by. I had been taking $2,000 a month as pay, and claimed it as a loan from the business.
The bank loan has been brought down to $122,000, and we just renewed it. 5 years after we opened the brick and mortar dance wear store, we opened an online dance wear store (both my mother-in-law and I worked on developing this).
Since the online store was doing better and needed more attention, and we were having trouble getting along (ex: in who has the final say, etc.), we decided to split the two. I own 20% and my mother-in-law owns 80%. (My mother-in law took over the online store and I, the dance studio). My husband and I separated, and I was running the dance studio as a single mother. The sales dropped, and we lost our lease
with the landlord. Currently, we have a buyer for the dance studio who would like top purchase it for $40,000.
Now, my in-laws say that when I sell the dance studio and brick and mortar store, they will be opening a new dance wear store a few miles away. They want me to sign on paper that I will owe nothing of this new store, in exchange for me not having to pay them all the money that I "borrowed" from them. In return, they will be taking all the inventory(valued at around $80,000) plus the fixtures, client list, software, computers etc.
I feel torn between being ok with this and being upset that I have worked for the past 6 years on a business, and am left with nothing. At the same time, I feel very guilty that they lost all this money they put into the business, though the online store is doing awesome, and if managed right, can and will pay off all their investments within 5 years or so, plus they will be bringing in substantial amounts of money (Based on the past year's growth rate).
My Question is, should I just let them have the business, or should I fight to keep my 20%? They have said that even if I own nothing in this "New" business, I am still morally obligated to pay them back what they invested. Is this correct? Or should I feel fine with having them take the business?