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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Business Law
Satisfied Customers: 19479
Experience:  B.A.; M.B.A.; J.D.
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I have a linen service registered as a LLC(1). I start some

Customer Question

I have a linen service registered as a LLC(1). I start some new customers financial by an investor for LLC(2) where I would have 50% ownership. LLC(1) would do the processing of the new customers, do all customer interfacing, collect the payments which would be turned over to LLC(1) and LLC(2) would reimburse some of the expenses of LLC(1). The investor started LLC(2) and currently is the only member and registered agent. Contracts for the new customers were in the name of LLC(2) but were only signed by an employee where both LLC(1) and LLC(2) paid their salary. All of this was started with nothing more than a handshake. It was started in August 2015 and final operating and contribution agreements were to be signed by January 2016. So far there has been no agreements, what rights does LLC(1) have if LLC(2) tries to pull out of the arrangment?
Submitted: 1 year ago.
Category: Business Law
Expert:  Phillips Esq. replied 1 year ago.

Hello: This is Attorney Phillips. Welcome to JustAnswer. I am reviewing your post, and I will post my response very shortly.

Expert:  Phillips Esq. replied 1 year ago.

LLC(1) would only get back percentage of the salary paid the employee who LLC(1) and LLC(2) paid the salary for in the proportion the salary was paid and nothing else. Since there is no written agreement as to LLC(1)'s ownership of LLC(2) and LLC(2) is the only member of LLC(2), LLC(1) gets nothing from the LLC(2). Without a signed Operating Agreement between LLC(1)and LLC(2), LLC(1) would be left out in the cold. This is the reason why an Operating Agreement must be signed before the parties start to invest their time and resources into a project.

Kindly give a positive rating to my response so that I can receive credit for responding to your post. There is no additional cost to you for giving a positive rating.

Customer: replied 1 year ago.
I am more concerned about LLC(2) actions than compensation. Since we are servicing the accounts, if LLC(2) should attach the receivables since the funds go through LLC(1) or refuses to pay LLC(1) for the processing then LLC(1) would have no choice but to stop processing the accounts. If LLC(2) did something this stupid then he would lose his investment because he is an investor who doesn't have the resources to process the accounts himself. With LLC(2) forcing LLC(1) to stop the processing this could severely damage LLC(1) reputation in a very limited market. So if it went legal who would have the better chance to prevail, LLC(2) the investor who loses his investment but has no written contract with LLC(1) or the scenario of LLC(2) the investor making big promises of further investment into LLC(1) so that LLC(1) could expand and then reneging on the promises, plus taking actions of interfering with those accounts that could then severely impact the reputation of LLC(1)? Three questions. Could a telecon be setup with two partners of LLC(1) who are in separate locations? What would be the cost if this is not covered by Justanswer? If we can setup a telecon what would your contact information be because it may be a couple of days before we could setup the call?
Expert:  Phillips Esq. replied 1 year ago.

I will opt out and give another Attorney the opportunity to further assist you.

Customer: replied 1 year ago.
Please past this on. The last thing we want to do is for the situation to go legal and we will do whatever it takes except if our backs are to the wall. There are a couple of demands we could not except, the first would be a demand for a merger that would compromise our independence, the second would be if there was the threat of the investor interfering with the customers that would damage our reputation because the linen business we are in is a very limited market. So I am looking for a conference call with an attorney with me and my son who has a lot more details about our relationship with the investor to discuss any actions that we may HAVE to initiate or what to expect if the situation went legal. We are willing to pay any additional fees for the call.
Customer: replied 1 year ago.
I am still waiting to get a response from the new business lawyer