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I formed a company as an LLC in NM with a partner in 2006.

His mother loaned us $35,000...
I formed a company as an LLC in NM with a partner in 2006. His mother loaned us $35,000 to get started. The checks she wrote to us all say "Loan". He left the company after 8 months citing that I was too demanding and that we ran out of money - which is true. 2 years later, I started another company in NV as an s-corp without "The" in front of the name of the company. He has not worked for the company since. I am now starting a new venture that will utilizes some of the things I invented while working under the s-corp. Additionally, I will be assigning these inventions to a brand new company with an investor in about 30 days. Am I vulnerable to his pursuit if my inventions eventually bear fruit? I am willing to assume the company loan from his mother as a personal debt in order to prevent any possible pursuit. I just want him to be satiated so I can grow my new company with my new partner (and his investment) in peace. Thanks for your thoughts.
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Answered in 4 minutes by:
7/5/2010
MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25,285
Experience: Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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Thank you for the post, no you are not vulnerable to a lawsuit from your former partner based on inventions created under the name of the S-Corp. The intellectual property of the S-Corp is not the property of the LLC.
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Customer reply replied 7 years ago
I met this new investor/partner after my former partner left but before I closed the LLC. It was 10 months into this new relationship that I closed the LLC and started using the S-Corp. I've assign all of my creations from the LLC to the S-Corp after I closed it. And then in 30 days my new partner and I will assign all of our collective creations to a brand new C-Corp - which is the venture partnership which my new partner will be investing in. Is that okay? What do I need to do?
Thank you for the additional information, you need to get a written statement from your former partner that he does not wish to make any claim to the inventions or intellectual property of the LLC. Hopefully, he executed a notice of termination or something of the sort when he left the LLC, if so, the written statement would not be necessary.
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Customer reply replied 7 years ago
He signed a notice of termination along within the contract that he said he signed "under duress". I believe all he really wants is for me to commit to paying back the $35K. BUT I need to be careful not to tip him off that I'm now creating something new with inventions he has not seen or heard of. (things I came up with long after he left). Given that he didn't sign a letter of termination (or feels the closing of our business contract was signed under duress) Is this possible? Do you write this type of contract?
Hello, from your description your former partner would not have much of a claim against you because the inventions were created after his departure, as evinced by the execution of the notice of termination. Duress is defined as a compulsory force or threat, from your description this would not apply.
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Customer reply replied 7 years ago
He said that he was "under duress" because I said I would have to shut the company down if I had no way of having closure with him. He said (6 months after signing) that it was a threat. I had to close the company anyway to start fresh. So it sounds like I'm okay. I'd still like a document with him so that there are no issues with my new partner/investor. Can I hire you to write this up? Is this something you do?
That does not constitute legal duress. You could get a document drafted, but it does necessary based on your description.
MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25,285
Experience: Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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MShore Law and 87 other Business Law Specialists are ready to help you
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Customer reply replied 7 years ago
Thank you for your help.
Thank you, XXXXX XXXXX good day.
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MShore Law
MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25,285
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Experience: Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements

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