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Since you are a sole proprietorship, that means you don't have a limited liability entity. So, if this company could prevail in a suit, he could pursue your company and you to collect. If you incorporate now, the cash would be beyond his initial reach because the corporation would be a separate and distinct entity, but your ownership in your new incorporated entity would be at risk. BUT, based on your facts, he's going to have a difficult time prevailing if: i) there was only a verbal agreement with no evidence that there was a full meeting of the minds and full accord and satisfaction on ALL the terms of the arrangement; and ii) even if there had been, he breached any such agreement by failing to perform. So, I wouldn't let him intimidate you as it seems to me he won't prevail. And, you might let him know if he does pursue this, you will be filing your own counter suit for damages for breach of contract since he's claiming there was an agreement and he has clearly failed to perform. :)
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Sorry for the delay....Had a pre-scheduled meeting. Yes, that is correct. :)
Thanks for your patience and I apologize the the inconvenience.
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