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Posted: Sat Jan 14, 2006 5:00 am Post subject: Partnership gone bad, now I want out...what do I do??
I have a business that the partnership has gone sour. We our not communicating anymore. I have moved away from the business cause of family reasons but I still own it. My partner is handling all the operation for the business now. Now I WANT OUT of the business. Our assets total is about 200k...the land is still under lease and also some of the equipment through a bank. The past 4 years we both have not paid ourselves anything cause we've reinvested our profits back to the company. The business is still operating today.
I'm not sure what I need to do to get out of the business? What do I say to the bank that gave me the loan to do my business? Do I just go up to them and say I'm not part of this business anymore and they need to take my name off? Do I need to file anything like partnership dissolution or something or tax papers? Also I was wondering now that I want out do my partner have to BUY me out? If so how much do I get out of it??
We both put in the same amount of money and time into the business and under our partnership agreement it's 50/50..
NOT SURE WHAT TO DO PLEASE HELP ANYONE.....THANK YOU...
Do you have a shotgun agreement? If you do, offer your partner to buy you out and if he/she doesn't accept you will have to buy your partner out for that price. If you don't have a shotgun agreement and there is no communication your company will go belly up eventually if you let it continue. There may be a legal way of enforcing a shotgun type agreement but I am not sure exactly. The money you profit that went back into the business is something you agreed upon at that time and has no bearing on what happens now.
As for the bank that will depend on what your contract states. Does the company owe the money? Is it incorporated? Was there a personal guarentee on the money? Read through your contract it should say something about that.
If the bank gave the money directly to the company and the company is incorporated you are not personally liable for it, unless it states in the contract "personal guarentee". If the bank gave the money directly to you and you used that to start the business then there may be a personal guarentee on it.
If I was you I would make an offer for your partner to buy you out. If he/she is still running the business they obviosly want to keep it. That is why shotgun agreements are good sometimes. In your situation it would end it quickly, without it, it will get sour so bad that the company will just get hurt and everything will be lost. I have seen that happen before.
Posted: Thu May 11, 2006 7:39 am Post subject: Re: Partnership gone bad, now I want out...what do I do??
A shotgun agreement is like this:
Parter A wants out the business. Partner B and Partner A are fighting. Partner A offers X dollars for Partner B to buy out Partner A. B has 30 days to buy out A, if B cant come up with the money or refuses too. A has to buy out B for that amount and B is legally obligated to accept. So there is a resolution within 30 days and no more fighting and damage of the business.
Each agreement can have differences .. it's something you write up extra with a partnership.
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