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legalgems
legalgems, Lawyer
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I can hope i am part owner in a cleaning company and my

Customer Question

i can hope i am part owner in a cleaning company and my business partner has not been paying me this has been going on for months i have access to the bank account, my name is ***** ***** and the business. can i legally withdraw the money without legal repercussions
JA: What state are you in? It matters because laws vary by location.
Customer: colorado denver
JA: Has anything been filed or reported?
Customer: in what way?
JA: Anything else you want the lawyer to know before I connect you?
Customer: she owns 67 percent, i own 33 percent there is also a buyout clause
Submitted: 19 days ago.
Category: Legal
Expert:  legalgems replied 19 days ago.

Hello! I will be reviewing your question and posting a response momentarily; if you have any follow up questions please respond here. Thanks!

Expert:  legalgems replied 19 days ago.

I am very sorry to hear this; can you tell me if per the operating agreement, does it only allow the other party to distribute payments; also if one took a payment would it comply with the distribution agreement as set forth in the operating agreement? Lastly is the individual paying him/herself?

Customer: replied 19 days ago.
28 February 2016 01:51
Business partner issues I paid for and...Business partner issues I paid for and built the business. She refuses to pay me back or pay me my %
JA: Thanks. Can you give me any more details about your issue?
Customer: A few years ago, my girlfriend talked about the idea of having a business. I alreayhad a couple and said we could buildone. I went and mae plans. Came up with name, website, marketing and more. I paid for all of it. She is now #1 in denver colorado for cleaning after my work and refuses to pay me back the statup costs, or my 5% revenue. Im 33% owner. I have an agreement signed that outlines all of this and its filed with the secretary of state under the biz. It explains that what i just said. When the biz was filed in 14, she basically backed out and said she didnt want it. In 15, i began to move forward with marketing and more. She did not want the responsibility and asked to just be a manager. I said its a bit late after state filings, etc. But not to worry. Im good at what i do and i would cover startup costs and she could work for me to supplement.
JA: OK got it. Last thing — Business Lawyers generally expect a deposit of about $18 to help with your type of question (you only pay if satisfied). Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.
28 February 2016 02:22
In addition to what was previously mentioned in chat, i have only received 1 check for $1000. I put around 10k+ into startup and 150 hours with close to an equivalent value. I used my own marketing business resouces to build it. I havent yet, but could easily create an invoice to validate these claims. And with the cost of marketing services of the quality i provide, and the fact that she is #1 across the board in the city, its obvious without my efforts she would not have what she does. I own 33% of biz and am to be paid a 5% cut of revenue. Revenue has been 250k+, i have received only 1k. I have bank access and have not withdrawn but am able to. The account climbs steadily and has over 40k currently.Should I just go withdraw the money Im owed? Are there any possible repercussions to doing so?If I withdraw the money, can I demand to be bought out from business? Do I or must I sue to be bought out or paid? Business value is increasing daily. This is one of my most successful businesses, and my most profitable. The basic agreement is filed with the colorado secretary of state.The company is Denver Cleaning Service Company.The agreement clearly outlines that i paid for and created everything for the business. Including the website, listings, business systems, paperwork, workflow, salesflow, and more.Fyi, this is my girlfriend doing this to me. Does that change anything? She also 'plays broke' not realizing I have access and know its very much to contrary. She sits by and has me pay for most of our bills and then tries to play my feelings saying she shouldnt have to pitch in. Making it seem like I am doing something wrong or trying to exploit her. I meanwhile, struggle on my end to pay our bills and keep my businesses afloat. While she uses my other companies warehouse as a dispatch area. And our home as an office, while stating she shouldnt have to contribute to either. She has become distant and seems like there may be more afoot. I cant tell if its cheating or if she if biding time to screw me out of the business somehow. I dont know what to do here. I feel foolish and taken advantage of. Damn follies of the heart. I guess some things are better to know now than later.Thank you for any and all advice.John
28 February 2016 02:37
Oh,I opted to only take 33% ownership as it was originally 50/50 and she wanted to give her mom some of business. Well, she never gave her mom any of business and my shares were tucked in her pocket. She recently tried to do this again, saying she wanted me to give her more of my percentage, so she could give her mother and her brother part of business. I dont think i will be complying this time.If I choose to withdraw my money, then sue to be bought out, can I sue to regain the basics that are listed in the agreement at the secretary of state? Website, listings, domain, etc? Can I sue for entire business? I literally set up the entire thing and she just sat in the chair.Sorry for the bombardment of info, this is certainly an emotional and frustrating matter.I was going to attach a link to colorado secretary of state, but that portion of their website is currently down for maintenance.JohnPs, if you choose to use this stuff on your site, i simply ask that we remove identifying info like comany name and my name, etc. Thank you.
Customer: replied 19 days ago.
i added the file for the secretary of state
Customer: replied 19 days ago.
here is the file again, don't know why it didn't go through last time.
Expert:  legalgems replied 19 days ago.

Thanks for that additional information;

if the agreement is silent as to withdrawals in regards ***** ***** then one would need to apply to the court to get permission for withdrawals if the parties cannot come to an agreement.
However, it sounds like one prefers a buy out; so in that case, the parties would need to agree to a buy out amount (if the operating agreement does not address that; and unfortunately many do not, particularly if a significant other is a partner)

So if no agreement cannot be arrived at, the party wishing to dissolve the corporation may do so under the following statute:

7-114-301. Grounds for judicial dissolution. (1) A corporation may be dissolved in a proceeding by the attorney general if it is established that: (a) The corporation obtained its articles of incorporation through fraud; or (b) The corporation has continued to exceed or abuse the authority conferred upon it by law. (2) A corporation may be dissolved in a proceeding by a shareholder if it is established that: (a) The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally, because of the deadlock; (b) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent; (c) The shareholders are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election of their successors; or (d) The corporate assets are being misapplied or wasted.

A buyout is another option under this statute:

7-64-701. Purchase of dissociated partner's interest. (1) If a partner is dissociated from a partnership without resulting in a dissolution and winding up of the partnership business under section 7-64-801, the partnership shall cause the dissociated partner's interest in the partnership to be purchased for a buyout price determined pursuant to subsection (2) of this section. (2) The buyout price of a dissociated partner's interest is an amount equal to the value of the partner's interest in the partnership. Interest shall be paid from the date of dissociation to the date of payment. (3) Damages for wrongful dissociation under section 7-64-602 (2), and all other amounts owing, whether or not presently due, from the dissociated partner to the partnership, shall be offset against the buyout price. Interest shall be paid from the date the amount owed becomes due to the date of payment. (4) A partnership shall indemnify a dissociated partner whose interest is being purchased against all partnership obligations, whether incurred before or after the dissociation, except partnership obligations incurred by an act of the dissociated partner under section 7-64-702. (5) If no agreement for the purchase of a dissociated partner's interest is reached within one hundred twenty days after a written demand for payment, the partnership shall pay, or cause to be paid, in cash to the dissociated partner the amount the partnership estimates to be the buyout price and accrued interest, reduced by any offsets and accrued interest under subsection (3) of this section. (6) If a deferred payment is authorized under subsection (8) of this section, the partnership may tender a written offer to pay the amount it estimates to be the buyout price and accrued interest, reduced by any offsets under subsection (3) of this section, stating the time of payment, the amount and type of security for payment, and the other terms and conditions of the obligation.

So generally the partner would bring a motion for dissolution and the other party would propose a buyout if they wished to remain in business.

Also partners owe one another a fiduciary duty so if one partner is receiving income while the other is being unreasonably denied that is a breach.

You may want to first try mediation to see if a buy out agreement can be reached.

It is not a good idea to take money unless specifically authorized under the operating agreement as that can be a breach of fiduciary duty.

Once we are finished on this I can send this to the moderators and ask them to remove identifying information- I am an individual contributor and dont have access to that.

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Information provided is for educational purposes only. Consultation with a personal attorney is always recommended so your particular facts may be considered. Thank you and take care.

Expert:  legalgems replied 16 days ago.

Hello again; just checking in to see how things worked out;
if you have further questions please don't hesitate to reach out to me here on Just Answer.
Thanks!

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