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Infolawyer, Attorney
Category: Business Law
Satisfied Customers: 1780
Experience:  Experienced lawyer
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Need to buy out a partner due to in differences. Appears to

Customer Question

Need to buy out a partner due to in differences. Appears to be cordial but he likely has an attorney guiding him. There are 3 partners, we just started 6 months ago, we have not done so well due to not agreeing on anything. Now we have 120k plus in merchandise, and the rest of the money was used to support ourselves and operating cost for the business. We had agreed that we would withdraw as needed to survive, some needed more than other's but that was agreed upon before hand. They withdrew 15k plus and taking merchandise that never returned since we started but so did we but we all told each other. They invested 72k in 3 stages. Partner 2 70k at once and partner 3 90k at once. They withdrew the least but we did not expect for them to want out so quickly. They are asking to have a sit down at their place but I do not trust them anymore. They are shifty type personalities. They have friends at the bank, police, attorneys, everywhere in town. We do not. We have tried to do what we can to get along but they are mean people. We have a 6,600/monthly lease in the corporation's name for 3 years with option. All the legal things and different accounts like office depot net 30 account are in his name. They are also in the other two partners name except for office depot. We want to continue the business but he knows too much about us and can easily compete. The contract for the lease shows our company and officers that signed the lease but it seems like they would not be on the hook? Also, we started our venture under another corp name and than stopped activities and started under a new name. We never made any money in that business just spent what we lent the company. Also, everything we did was verbal and we all agreed to lend the corporation money but never drew up terms. they borrowed from a personal loan and then lent it to the corp. We are a C corp from delaware and qualified in california. If we buy them out, than we have to obtain for debt to survive. If we all also want to quit? how do we divide up whats left without fighting about it. What would be fair?
Submitted: 4 years ago.
Category: Business Law
Expert:  MShore Law replied 4 years ago.
Thank you for the post, I am happy to assist you by answering your questions. Is there a net valuation of the business? If yes, what is its value?
Customer: replied 4 years ago.

Can you explain what that is? What are assets are?

Expert:  MShore Law replied 4 years ago.
A net valuation is the value of assets (e.g. inventory and accounts receivable) minus liabilities (e.g. debts).
Customer: replied 4 years ago.

ok than yes, it is 115, 000 in inventory, 4900 in accounts receivables, and 1500 in the bank. We have a 20,000 dollars sale coming in this week. which would put at us 95k in inventory and 21,500 in cash. They want what they put in, minus what they withdrew which is about 60k approx. Is that fair? We would have to sell to pay them off in the first place but would leave us with not much to keep going. We can try and get more loans but might be tough.

Customer: replied 4 years ago.

We did withdraw more than they did since we started but most went to business start up cost.

Customer: replied 4 years ago.


Expert:  MShore Law replied 4 years ago.
Thank you, in the most recent written agreement (shareholder, partnership, joint venture agreement, or otherwise) does it stipulate the earliest date they would liquidate their interest in the company? If not, would they be open to payment in installments so that the business could survive without additional loans?
Customer: replied 4 years ago.

I dont know but I don't think so, We believe they have an agenda. We think they are renting a new location to start a new business and probably try and destroy ours.

Expert:  MShore Law replied 4 years ago.
Does your agreement with them have a noncompete clause?
Customer: replied 4 years ago.

No agreement ever made. I know, bad mistake.

Expert:  MShore Law replied 4 years ago.
Indeed, do you know whether they will be using the trade secrets of the current business to build a competing business?