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BartEsq
BartEsq, Researcher
Category: Business Law
Satisfied Customers: 1506
Experience:  Juris Doctor
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My business partner is threatening to dissolve our company

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My business partner is threatening to dissolve our company if I do not agree to sell to him at an absurdly low price. We both have a 50% share. I have had the business appraised just to make sure it was not me who was being unrealistic.
Can he dissolve the company?
Can I stop this?
Can i sell to a 3rd party?
His actions seem completely irrational to me but there is no way that we can continue to do business together
It does not seem fair that once a company has finally become profitable, that one partner can choose to dissolve it. If he does this, I will also be exposed to litigation from our landlord. What are my options?

BartEsq :

Hi, my name isXXXXX going to try and help.

BartEsq :

How is the business organized? LLC?


 

Customer:

Hi Bart, LLC

BartEsq :

Ok, technically it would require both of you to dissolve the business. With that said, in a 50/50, the other owner is authorized to act so could dissolve iwth the state without your concent....of course then you would have to sue him for his improper act. It sounds like the other owner is aware he can cause trouble for you even if your consent is required. This is called coersion and maybe extortion at some point.

BartEsq :

Point is, there is a way things are suppose to go and ways it could go with the other owner acting rogue.

BartEsq :

Probably not a good idea to stay partnered up with him...sounds like a liability that could cost you in the long run.

BartEsq :

If you can negotiate a buyout, it might be a good idea. If not, you will be looking at having to go to court after the fact for anything wrong your partner does.

BartEsq :

You ask what your options are, thats hard to say with your partner as a variable. What do you want to happen?

Customer:

It is definitely proving to be a difficult partnership. Is coercion considered to be an improper act? Can I sell my half of the business? are his actions of trying to dissolve the business during the sale period actionable?


 

Customer:

One of us has to go. I have offered to buy him out, he refuses. I have offered to sell, at a price determined by a neutral appraiser, he refuses.


Mostly I would like to sell as he has tainted this entire experience for me

BartEsq :

He has not done anything yet except threaten you and try to bully. Unless the operating agreement says otherwise, you are free to sell. The only thing you can do for somehting that has not happend yet is to get an injunction stopping your partner form dissolving.

BartEsq :

Yes, 50/50's can get tricky. Until he actually does something wrong, you are just negotiating.

BartEsq :

Read the operating agreement closely. See if there is anything you can use in the agreement. Without going to court, its a civil matter between the two of you.

Customer:

So I could get an injunction to prevent the dissolution of the business until which time I could sell? After selling, can he just turn around and dissolve it on the new partner, as in, are they protected in any way?

BartEsq :

No more protected than you.

BartEsq :

Only thing more legally intimate than a business partnership is marraige. Your partner is taking advantage of the 50/50 split of authority to act on behalf of the LLC. You probably have grounds to get him out of the LLC but you have to check the operating agreement for removal proceedures and it will most likely require court.

Customer:

Last question How long would the injunction last? Does he need to act first and then I seek an injunction?

BartEsq :

http://www.calbar.ca.gov/Public/LawyerReferralServicesLRS.aspx


For your reference, here is a link to the CA bar association lawyer referal service in case you need it.

BartEsq :

The injunction can be temprary or permanent.

BartEsq :

you can seek an injunction now.

BartEsq :

Anything else I can do for you?

Customer:

That should do it Bart


Thanks a bunch

BartEsq :

No problem.


 


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