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I have the chance to join a LLP coop that would procure cattle

for a new packing plant...
I have the chance to join a LLP coop that would procure cattle for a new packing plant. The cost is 60 grand . In return I would have a seat on the board for the coop.The right to deliver 600 cattle annually to the packing plant at a negotiated lucrative grid. 600 B shares in the coop. And if A shares are sold to the public the b shares would trade for 2 a shares. I would not get stock or shares in the plant. But an easement. This plant is state of the art with high tech equipment. My opinion is if present management and owners do not survive financially Tyson or some one else is going to own and operate. It was explained to me the easement and grid would have to be honored by new ownership. This seems like a stretch to me. Sandy beach security. Can you give me sound proven advice? Lonnie VanderVorst
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2/3/2013
CalAttorney2
CalAttorney2, Attorney
Category: Business Law
Satisfied Customers: 10,244
Experience: I am a businesses law attorney, with experience advising and representing owners and investors.
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Dear Customer,

To ensure I am answering your question correctly, I understand that you are looking for information on how an LLP can be structured and what assurances, if any, can be given regarding future management.

These answers to these questions are all contained in the entities operating agreements, however, the entities you describe are unusual in that limited liability partnerships do not go public, that term is reserved for corporations. With the remainder of the structure, I would highly advise getting copies of all of the operating documents and carefully reading them.

As far as the potential future management, that is pure speculation, if you are concerned about your management, you should take measures to account for that now.

Many entities such as the one you describe work well for their investors. However there are many that take advantage of their investors, particularly those not already involved in the industry.

I hope this helps, if you have any questions or if I missed or misunderstood what you were asking please let me know,
Bill
CalAttorney2
CalAttorney2, Attorney
Category: Business Law
Satisfied Customers: 10,244
Experience: I am a businesses law attorney, with experience advising and representing owners and investors.
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Customer reply replied 4 years ago

Sorry it took so long to get back. The easement would or would not give me right to deliver cattle to new owners if that were to happen? And they would not have to honor the agreed grid agreement if its connected with an easement?

Hi Lonnie,

Remember, I cannot read your documents on this forum, so I cannot give you a firm answer on this question (I just want to make sure there is no misunderstanding).

The proposed business arrangement appears to be overly complex. If the LLP is designed to make arrangements for the delivery of cattle, and it is separate and apart from the packing plant, there does not seem to be any issue with the current management of the plant. The only issue that appears from a pure economics study is that without the plant operating it will be more costly for the LLP to deliver cattle to another processor.

The right to deliver, and the grid and agreement appear to be rights owned by the contemplated LLP. However, from your post I am not certain that this is the case. If this is not the case, it would appear that the LLP owns nothing, and merely organizes cattle.

There does not appear from what you have described anything that would require new plant owners or operators to honor a grid agreement absent express contract between the plant and the coop. If the LLP has a procurement contract with the Plant for a period of time into the future, that could be part of a plant purchase agreement and be binding on future plant owners. This all depends on the language in the contract.

If the grid agreement and the easements are the important issues for you in this transaction - look to make sure that they are spelled out clearly and in plain language in (1) the LLP partnership agreement, (2) a contract between the LLP and the processing plant, and (3) any contracts binding landowners or necessary partys to the grid or easements with the LLP.

If you are giving away any easements on your own property, I would advise getting an attorney to at least take a look at the document to make sure it is not overreaching and can be terminated appropriately.

Best regards,
Bill
CalAttorney2
CalAttorney2, Attorney
Category: Business Law
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Dear Lonnie,
Thank you for the kind rating, it is greatly appreciated. I wish you the best of luck with this matter. If you have further questions regarding this type of issue, or any other legal matter, please do not hesitate to use our service in the future. You may post a question for any of our experts in general, or to me directly by titling your question “To CalAttorney 2…” or using the link: http://www.justanswer.com/law/expert-wdb-esq/
Best regards, and thank you,
Bill
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