Two and a half years ago myself and another guy David XXXXX brought shares in a bar called Fast XXXXXX. The bar had been open for about a week prior to us buying in, but it had not been registered as a company or anything and was not actually licenced yet. The guy who had started it, Grant XXXXX had told us both he had seven years experience owning a bar and he was putting in 15,000 and would manage the bar. I put in 15,000 and was to be a working shareholder and David put in 30,000 and was a silent shareholder. I was actually 17 at the time so it was put in my grandmothers name until I was 18. The company was incorperated with Grant having 40%, me having 30% and David having 30% Over the years it has become clear that Grant had no real experience running the bar (he didnt know how to make cocktails, didnt know anything about tax, hasnt even put in a POS system etc etc) I also dont believe he ever put in the 15,000 as I have never seen any record of this. While I was working with him, things started to be done illegally. There is an illegal smokers room in the bar, no system of keeping track of cash (so he spends the cash and doesnt declare) the books were not done at all untill recently (not sure if they are finished yet-but alot will be unaccounted for) he spends alot of the money made on drugs, he has talked about setting up a drug laundering ring, he parties (and sleeps) in the bar for days, gives hundreds of dollars worth of alcohol away every day, there is no duty manager in the bar at all since Feb this year, all staff are paid in cash and not declared. This is just the stuff of the top if my head - not to mention bad hygenic practices behind the bar. So I left (mainly after he started talking about drug laundering etc). I rang David and explained the situation, and he said he was interested in getting out also - partly because of what i had told him and partly because he has never seen any of the prophits from the business (as promised) and everytime he asked, Grant just brushed him off. So my dad acorrisponded with grant and came up with a solution that he would get some of his friends to buy us out for the same amount we put in... I recieved my 15,000 a couple of weeks later, but now Davids buyer has pulled out. Our attempts to talk to Grant about this have just gotten responces like "its your responsibility to find a buyer, not mine"... I guess that probably is true, but we dont want to lie to people about why we wanted out, so the only real options are his friends who want to do the same stuff as him. I guess the main points are that he lied to us when we brought in, he has never given Dave dividends for shares, he is poorly managing the business (to the point where it could easily be shut down) and he has used Daves money to support his own personal lifestyle..
Hi Welcome to JustAnswer. My first response will follow shortly. Please feel free to follow up if anything is not clear
I think you are lucky to get your money out, but if the local licensing inspector were to look in to this the bar will be closed down immediately.
Normally in a situation like this I would suggest that the way may be to get the company liquidated. But that may mean losing the money as well.
There should have been a shareholders agreement which sets out the management and buyout and dispute resolution, but if you do not have this then you need to consider how to bail out your friend. Selling to one of the friends of the guy who started this may be the best option, because then it passes the problem back to him but gets you out.
I am not sure what further advice you need-just ask away
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).