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I entered into a business partnership small business here in…

Customer Question
I entered into a...

I entered into a business partnership small business here in california

Lawyer's Assistant: Has anything been filed or reported?

Yes we went down to city hall and signed a few forms

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

Yes, we signed a business registration form, ein legal name, ficitious business statement and ss-4

Submitted: 3 months ago.Category: Legal
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1/6/2018
Lawyer: Lori, Attorney replied 3 months ago
Lori
Lori, Attorney
Category: Legal
Satisfied Customers: 1,201
Experience: Attorney with over 25 years experience
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Hello. Let me try to assist you. I am assuming you also incorporated with the Secretary of State, correct? How can I help you?

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Customer reply replied 3 months ago
Everything went sour , and I am trying to have her out of the business. We never signed any business agreement or operating agreement or had a fail safe for if some one wants to exit out . She doesn’t pull her wait here, and I’m more of the managing Partner for day to day activities and taxes . She says she will sue me for not fully disclosing financial documents to her . She want s the passwords to the accounts basically but I won’t give them to her afraid she might take the money and go. She is also under a lot of stress Dad died, just got divorce , and health emergency issues . Can I do anything saying she is unfit to contrinue ?
Lawyer: Lori, Attorney replied 3 months ago

Yes, partners and directors owe a fiduciary duties of loyalty and care to each other. You can file suit against for breach of her fiduciary duties. You can ask the court to appoint a receiver over the business, if you want. Since it is 50/50 - she cannot tell you what to do. You have the right to run the place and managing as you always have. She will have to prove that you are improperly taking money from the business (very hard to prove). So if you want to stand your ground, you can do so.

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Lawyer: Lori, Attorney replied 3 months ago

Here's a good blog article on the fiduciary duties, as some background:

https://www.sandiegobusinesslawyerblog.com/2014/01/fiduciary-duties-of-officers-a.html

Hope that helps. Anything else, please reply.

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Customer reply replied 3 months ago
Can she sue me for not giving her access to profit loss statement but giving them to her when requested? Also I feel she is trying to sabotage the business by not taking care of it and yelling while customer are here along with making actual employees uncomfortable so that they leave and I have to find more .
Customer reply replied 3 months ago
I’m addition to being very abusive towards me
Customer reply replied 3 months ago
What resolutions can I propose to her to make this easy ? Can I start over and open up a new name and bank account on my own ? Can I renegotiate something with her ? Can I have her sign something to leave ? Can I go to city hall and get my name removed and start over and still use my building for business so basically notnhave the daily operation money go to that account anymore and to the new one only with my new business name ? And let the old business name and account go to zero and not attached to anything ?
Lawyer: Lori, Attorney replied 3 months ago

She is entitled to periodic disclosure of the P&L, say on a monthly or weekly basis (not on demand). court looks to a reasonableness test. If she is being abusive, you may wish to consider a security guard on premises or calling cop when she gets out of hand. Be sure to document all of this in writing and in photos for court.

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Customer reply replied 3 months ago
We are a small business partnership not a corporation
Customer reply replied 3 months ago
What resolutions can I propose to her to make this easy ? Can I start over and open up a new name and bank account on my own ? Can I renegotiate something with her ? Can I have her sign something to leave ? Can I go to city hall and get my name removed and start over and still use my building for business so basically notnhave the daily operation money go to that account anymore and to the new one only with my new business name ? And let the old business name and account go to zero and not attached to anything ? If
Lawyer: Lori, Attorney replied 3 months ago

Yes, you can try to get her to leave by buying her out. She will demand a copy of the current general ledger/P&L. Since you are partners, you can just leave -you will still have the responsibility to the partnership. However, if she won't let you buy her out, then demand that she buy you out.

You cannot a new business until you resolve this one. Partner has a duty of loyalty to the partnership and starting a new company would be disloyal and self-serving.

Does that make sense?

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Lawyer: Lori, Attorney replied 3 months ago

Sorry - meant to say -- since you are partners, you can NOT just leave....

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Customer reply replied 3 months ago
is there a way to dissolve the business partnership?
The partner engaged in wrongful conduct that adversely and materially affected the partnership business can this work if they are yelling while guess are here ?
if they Become a debtor in bankruptcy can i make them go some how?
can i prove she has become emotionally incapable of doing her duties due to her circumstances?
she also doesn't recieve any profits of the business
Lawyer: Lori, Attorney replied 3 months ago

You can dissolve the company voluntarily if you both agree. If not, I recommend suit against your partner for breach of fiduciary duties and for dissolution of the partnership by the Court. If she is unstable, you can have her Baker Acted.

If the company is not doing too well financially, you may consider bankruptcy filing on behalf of the company.

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Lawyer: Lori, Attorney replied 3 months ago

If she does not receive any profits, does that mean she does not have any shares?

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Customer reply replied 3 months ago
what if she is personally going into bankruptcy?
what if i let her buy me out of the business name and bank account and then open up my own name and account in the same building? before i said this by just starting over new , this time its buy letting her buy me out and starting new ? will that work? or if after we dissolve can i start back up new again like nothing happened? with a similar name etc ? although the business still operates as usual until i put the new name on it?
Customer reply replied 3 months ago
we aren't corporated. i do all the work she comes in every now and then. she doesnt take any money from the account to pay herself . however our partnership i think is 50 50 since its a partnership and we dont have any paper work stating other wise. i take 20 % of whats leftover monthly of the profit and the remainder stay in the account for the business.
Lawyer: Lori, Attorney replied 3 months ago

If she files for bankruptcy, the only issue is whether she has an assets - such as shares of the partnership?

Yes, you can let her buy you out of the business (close the bank account) and take you off as a partner or officer - then you can start a brand new business and set up our own business, bank account in the same building. Is the current business leasing the building?

If she buys you out - she is out and you can continue the business name in the same building. I would still close and open new bank account or be sure to remove her as a signer on the bank account.

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Lawyer: Lori, Attorney replied 3 months ago

If the partnership was never filed with the State, no partnership agreement and no shares issues, then it will be hard for her to prove she owns anything other than what you want to give her to get her out.

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Lawyer: Lori, Attorney replied 3 months ago

Sounds like you have a very strong basis to force her out for a small payout since she does not contribute and has no shares to enforce.

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Customer reply replied 3 months ago
she is on the lease with one other person, and this happened before we started our partnership.
Lawyer: Lori, Attorney replied 3 months ago

Okay, you will have to buy them out of the lease so that you can stay in the same space in the building. If there is other space available in the building or area, you could start you business elsewhere. I am assuming you want to stay in the same space because it is already built out.

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Customer reply replied 3 months ago
Correct she is on the lease but the other person on the lease wants me to stay .
Lawyer: Lori, Attorney replied 3 months ago

That good news. If your partner has not and is not contributing on the lease, then you will not need to buy her out. She will likely request a release from the lease. In fact, you can ask the landlord to remove her from the lease or you can sign an amended lease with the landlord with her name removed.

Hope that helps to answer all your questions.

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