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I am in the middle of a multi pronged legal battle. The core…

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I am in the middle...
I am in the middle of a multi pronged legal battle. The core of the case is whether or not my partner was able to take control as the manager of a $30M asset with a new entity he created. The problem however (and the proof), is that he has done based on my willingness to transfer stock from another entity to be held and a willingness prior circumstances to allow him to have control in my absence. Which was two years.
However, here is the crux of the issue. He has assume control with in house counsel and the problem is that I am not nor have I ever been a manager of the company he assumed he owns it's stock now and has control. My wife and my other partner are the managers and they never signed any transference documentation or subscription agreements, nothing. A provision within the Operating Agreement says that a sale or transfer of assets can only take place with unanimous consent of the both managers. Neither gave and my wife never even knew. They simply waived a magic wand and assumed since it was my intention to transfer (subject to both managers approval and appropriate closing docs) that they somehow have it. Oral law would not hold here. I have and have never had any authority, and they simply failed to doc any transfer or get any signatures. As such we seed to adjudicate the ownership and control and reaffirm that the entity they claim to have the assets from is vapor and never transferred. You cannot buy or transfer an asset with a subscription agreement, transfer mechanism, closing documents in most cases the issuance of a certificate. It is akin to moving into someones house when they are on vacation and claiming they own because the party who is squatting believes that expressing interest someone how negates and actual sales contract, consideration and authority.
Without documentation, which we know they can produce, doesn't the harmed entity that never agreed to transfer its stock nor give up control have a slam dunk to force the production of valid documents or the deal unwinds.
Thank you.
Submitted: 2 years ago.Category: Legal
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Answered in 17 minutes by:
1/29/2016
Lawyer: Glenn Zimmerman,
 replied 2 years ago
Glenn Zimmerman
Category: Legal
Satisfied Customers: 34
Experience: Attorney at Law Office of Glenn D. Zimmerman
Verified

If you are discussing a 30 million dollar asset, then I must assume that this was/is a C- corporation. It will be governed by the articles of incorporation and bylaws. The Articles set up the bylaws and how they can be amended. You, in all likelihood have a fraudulent transfer, but once again this depends upon the articles and bylaws. I wish I could give you a concrete answer, but there is not enough information. to properly answer your question would take a detailed review of your corporate documents, which is not really appropriate in this form and would cost significantly more than is charged here. Additionally, with this kind of money at stake, you need a good local attorney, versed in California law and your local courts. I just finished a similar case and it is not a simple case. Good Luck.

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Customer reply replied 2 years ago
It's not a C-corp. They are all manager managed LLC's., and it requires both managers to unanimously consent to any transfer or sale of the assets or stock or dissolution or take on new debt or equity, etc. And their in-house lawyer surely knows of these provisions where he used the harmed entities Operation Agreement as a clone for the new entity. So he is certainly now unfamiliar with what is required. My wife and partners position, which is the meat of this case is that "who cares what Adam (me) may have ever said, implied or agreed to, he had NO AUTHORITY and never has and is not an agent, officer, employee or shareholder or member of the entity in question.
Customer reply replied 2 years ago
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer reply replied 2 years ago
Glenn, there is really no need for further review at this point. I have three litigators but I wanted advice from a good contract lawyer. These are LL'c with managing members. The nuts and bolts of each agreement are section 3.9 (a) which restricts just about everything, including specifically the transfer or sale of assets without unanimous consent by both managers. It never happened, period. The rest of the OA is just boilerplate in accordance with LLC laws and nowhere does it provide for any alternative to transfer or sell assets other than the very strict provision of 3.9 (a).
Lawyer: Glenn Zimmerman,
 replied 2 years ago

That's what I thought as well. The only real question is whether the Articles allow for modification of the OA. Some savvy litigators and businessmen try to exploit the AI to modify the OA and operate in the shade.

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Customer reply replied 2 years ago
Nope, the OA cannot be modified in any way without the both signatures of the Principle Members. See 3.9(a)(i) below. GIve me your number. I have four lawyers between Ca and Utah right now under retention - all litigators and I have not sought out contract/securities counsel because the best in the biz drafted these express provisions, but I may want you to take a review of the OA just to be extra sure. I am OCD.3.9 Voting Rights. Except as expressly provided in this Agreement or required by law, Members shall have no voting, approval or consent rights. Members shall have the right to approve or disapprove matters only as specifically stated in this Agreement, including the following:(a) Approval. The following matters shall require the Unanimous consent of the Principal Members who are not the subject of an Optional Purchase Event:
(i) any amendment of the Articles or this Agreement to reflect:
(A) the issuance or authorization of additional Membership Interests, or the admission of a Member who is admitted in accordance with this Agreement;
(B) Capital Contributions made pursuant to Section 2.4; and
(C) a change in the number of Managers.
(ii) Acquire, Finance, Operate, Sell Assets as described in Section 4.4(c).
(iii) Convey and Encumber Assets as described in Section 4.4 (e).
(iv) Repay, Refinance Indebtedness as described in Section 4.4 (f).
(v) any issuance of Membership Interests having a preference as to distributions or liquidation rights over those of the Initial Members.
(vi) any expenditure or investment on behalf of the Company in excess of Twenty Five Thousand Dollars ($25,000) in any one transaction, and not to exceed One Hundred Thousand Dollars ($100,000) total with any series of transactions.
(vii) Incur debt obligations on behalf of the Company.
(viii) The hiring or firing of any Executive Officer or Primary Consultant.
Lawyer: Glenn Zimmerman,
 replied 2 years ago

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