Business Law

Ask a Business Lawyer. Get Business Law Questions Answered ASAP.

Ask a Lawyer,
Get an Answer ASAP!

Business Law
This answer was rated:

I have a wife with a LLC that is going bad. The LLC has not

I have a wife with...
I have a wife with a LLC that is going bad. The LLC has not been in place long so the capital contributions are minimal. Despite my continued insistence they never signed the Company Agreement which was originally produced from our site. One of the members was spending out of control and taking money from the business accounts at her leisure without any real voting or consent or sometimes even though the members agreed not to spend the money. The problem member sent an email stating that she is withdrawing and then sent a representative name with no contact information. She has been spreading all over the online community various rumors and in some cases outright lies resulting in several canceled orders. What can be done to remove the Member and protect the other members? Is there a way to save this company or does it just need to wind-up or terminate?
Show More
Show Less
Ask Your Own Business Law Question
Answered in 2 minutes by:
4/1/2013
Dimitry K., Esq.
Category: Business Law
Satisfied Customers: 41,221
Experience: Run my own successful business/contract law practice.
Verified
Thank you for your question. Please permit me to assist you with your concerns.

I am genuinely sorry to hear that your wife is in this situation. What, if anything, was ever signed? Is there at least some measure of articles of operation in place? How many members are there, all together? What are the other members considerering in this situation? How much money is missing, or at least improperly utilized?
Ask Your Own Business Law Question
Customer reply replied 4 years ago

The certificate of formation is the only signed document. I would say that the only articles of operation would be the Company Agreement. It was not signed, however, it was uploaded to the company document cloud storage for use and review. There was one video meeting to discuss the changes and a revision was then sent out. There was a general understanding that these were agreed to.


 


There are three members. The other member wants the concerning member out; however, it can be done. A few thousand dollars the concerning member originally improperly utilized; then the other two members did a firesale of inventory to make up the difference to pay the for the order. The concerning member then took the additional money she felt was hers from what she had put in. They have frozen account and moved the balance of money where she does not have access to it.

Thank you for your question. Please permit me to assist you with your concerns.

So was anything, at any time, recorded with the state? The articles of formation, were they filed?
Ask Your Own Business Law Question
Customer reply replied 4 years ago

Yes, the articles of formation were filed with the Secretary of State. Texas they refer to it as the Certificate of Formation. That is the only document outside of the Tax ID information.

Scott,

That helps a lot, thank you for your clarification. I ask only to find out if the entity is legal since that would make all of the shareholders fiduciaries of the company and therefore bound by their duty of loyalty and their legal obligations to properly protect the interests of the company and other shareholders. That, essentially, translates into the fact that other shareholders can file against this person for funds that she misused (as it would be a breach of fiduciary duty), but also personally sue on behalf of the company for loss of reputation, business defamation, and other losses. It would help tremendously if all of the parties can band together and sue as one, but really your wife, being one of the shareholders, can pursue all of these options on her own if she wishes to do so. The courts would have to be utilized in removing her from the company since no procedure exists, but Texas corporate law will be used by default if any process is not directly defined in company records and documents.

Good luck.

Ask Your Own Business Law Question
Customer reply replied 4 years ago

Thank you, XXXXX XXXXX Agreement provides the basis of which we thought we should move forward even though it was not signed. Your response actually validates the discussions I have been having with them specifically the fiduciary and defamation. We have drafted up a Notice of Withdrawal based on a breach of fiduciary duty, however, they have yet to send it to her.

Thank you for your follow-up, Scott. You are most welcome.

The fact that it was not signed does weaken your claim--typically parties are bound only if they have formally agreed to terms. A company agreement that is not signed is merely a draft which would mean that state law would govern rather than language in the agreement. It would be wise to send her the notice and threaten a potential criminal action for embezzlement (which may be a reasonable action on your part) if you can show she used monies without any legitimate purpose or advance permission, AND without any benefit to the company.

Good luck.

Dimitry K., Esq.
Category: Business Law
Satisfied Customers: 41,221
Experience: Run my own successful business/contract law practice.
Verified
Dimitry K., Esq. and 87 other Business Law Specialists are ready to help you
Ask your own question now
Ask Dimitry K., Esq. Your Own Question
Dimitry K., Esq.
Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41,221
41,221 Satisfied Customers
Experience: Run my own successful business/contract law practice.

Dimitry K., Esq. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

< Previous | Next >

Meet the Experts:

Infolawyer

Infolawyer

Attorney

1,793 satisfied customers

Experienced lawyer

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

41,221 satisfied customers

Run my own successful business/contract law practice.

MShore Law

MShore Law

Attorney

1,233 satisfied customers

Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements

RGMacEsq

RGMacEsq

Attorney

742 satisfied customers

Licensed Texas General Practice Attorney

Barrister

Barrister

Attorney

640 satisfied customers

17 years practicing attorney, JD, BA, MBA

Ely

Ely

Attorney

564 satisfied customers

Counselor at Law.

J.Hazelbaker

J.Hazelbaker

Attorney

393 satisfied customers

Experienced and trained in the area of business law.

< Previous | Next >

Related Business Law Questions
I'd like to look into opening an business account for an LLC
Second opinion] I'd like to look into opening an business account for an LLC with a member that's currently incarcerated... and a personal account for the person that's incarcerated. My guess is a tru… read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,682 satisfied customers
This spring we set up a family business. We want to get LLC
This spring we set up a family business. We want to get LLC status but have many details to work through as far as owners, structure, etc. We need to collect sales tax for products and need a tax numb… read more
PaulmoJD
PaulmoJD
Attorney At Law
Doctoral Degree
106 satisfied customers
THe other member of a two member LLC abandoned the LLC
THe other member of a two member LLC abandoned the LLC leaving me with no financial data that is reliable and actually took some assets worth some $700+. I filed a small claims action but it has taken… read more
WiseOwl58
WiseOwl58
JD Honors Graduate
3,487 satisfied customers
Mostly, do I have the right as a shareholder to request a
Mostly, do I have the right as a shareholder to request a copy of the bylaws? No one says I don't but I want to make sure I do before I ask.I am part of a small family business. The president, who is … read more
mclemorelawyer
mclemorelawyer
Doctoral Degree
4 satisfied customers
Business Law Question: We have an LLC set-up (Delaware) and
Business Law Question: We have an LLC set-up (Delaware) and are finally ready to pitch for investor funding... One of our main partners got into some financial troubles last year, and to put it bluntl… read more
LegalPro
LegalPro
Doctoral Degree
563 satisfied customers
I have an existing TX LLC, doing business in CA. This LLC
Hello. I have an existing TX LLC, doing business in CA. This LLC will generate income from all over the world. I am going to register the TX LLC as a foreign LLC doing business in CA. At the same time… read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
886 satisfied customers
Converting my llc business to a c corporation and looking
Converting my llc business to a c corporation and looking for a lawyer to sign the paperwork … read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,682 satisfied customers
My wife and I own a business (LLC) through which she rents a
My wife and I own a business (LLC) through which she rents a chair/booth from a place that specializes in renting out chairs to cosmetologists so that she can perform hair styling services. She is not… read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
5,853 satisfied customers
Do all shareholders, ( 3 shareholder corporation) have the
Do all shareholders, ( 3 shareholder corporation) have the right to inspect the bank accounts? (florida corporation) … read more
Dwayne B.
Dwayne B.
Juris Doctor
28,480 satisfied customers
I have a business in NJ its a registered as an LLC...my
I have a business in NJ its a registered as an LLC...my partner no longer wants to be a part of this what form does she need to sign … read more
Gerald, Esq
Gerald, Esq
Juris Doctor
3,029 satisfied customers
I am selling my business and need to have the LLC changed to
I am selling my business and need to have the LLC changed to the buyers name and have my SSS # removed for the EIN … read more
PaulmoJD
PaulmoJD
Attorney At Law
Doctoral Degree
106 satisfied customers
I am 51% owner in an LLC. We need a capital call and also
I am 51% owner in an LLC. We need a capital call and also have liabilities, but the 49% owner is refusing to pay his 49% share. What are my options? … read more
Damien Bosco
Damien Bosco
2,978 satisfied customers
I have a business partner for an LLC in Florida. He is
Hello, I have a business partner for an LLC in Florida. He is withdrawing and says I have to buy him out. Is that correct, do I have to buy him out? … read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
886 satisfied customers
In 2006 we formed an LLC with 2 business partners, and
In 2006 we formed an LLC with 2 business partners, and bought a warehouse in Las Vegas I own 40%, partner 2 owns 50%, and partner 3 owns 10%. I live in FL, partner 2 is in TX, and partner 3 is in NC.T… read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,793 satisfied customers
I'm running my business as an llc registered in California.
I'm running my business as an llc registered in California. Looking to become incorporated in Delaware and dont want to change business names. I also want to have a fresh start on my accounting. Is th… read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
886 satisfied customers
I live in California and just filed an LLC for my business
I live in California and just filed an LLC for my business in Delaware. I have a DBA filed in California though. My business is interstate e-commerce (I sell supplements on Amazon.com) and I provide p… read more
PaulmoJD
PaulmoJD
Attorney At Law
Doctoral Degree
106 satisfied customers
Forming a LLC in Alabama for a minor child's business,
Forming a LLC in Alabama for a minor child's business, should this be as a sole proprietor or best as an Partnership ? How Can parents be listed as authorized signers ( as members or managers) what is… read more
KJL LAW
KJL LAW
Juris Doctorate
1,616 satisfied customers
I started a business as an llc in 2012 and slowly closed it
I started a business as an llc in 2012 and slowly closed it but not dissolve . In the past few months my sister and I have been talking about starting it up again together as partners . What formation… read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,682 satisfied customers

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).

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).

Show MoreShow Less

Ask Your Question

x