Legal Question in Business Law in Georgia

Business Partnership Debt

I had signed for a business line of credit as a partner. The other person that had signed as a partner ran up the credit line without my knowledge and left town with the outstanding debt. I had ZERO activity in the business prior to the debt, nor since. I contacted the Lawyer handling the debt. Original amount was $70K and a settlement amount of $12K has been established. In addition to the settlment amount the lawyer is requesting copies of my personal financial statement and last IRS tax return. Do I have a case against the partner that left and what do I do about the financial statement and last IRS tax return?


Asked on 12/01/08, 4:58 pm

2 Answers from Attorneys
Scott Riddle Law Office of Scott B. Riddle, LLC

Re: Business Partnership Debt

It is common for a creditor to request financial information prior to accepting a lower payment. If that is a condition of settlement, you will have to make the decision to agree or not agree. That is not a legal question. As far as the partner, normally a co-signer can pursue the other party for the debt, depending on the terms of any agreement between the parties.

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Answered on 12/01/08, 5:03 pm
Jeff Kent Kent & Merritt, P.A.

Re: Business Partnership Debt

As to the financial statement and tax return, that is fairly standard practice. However, you said that the "settlement amount of $12k has been established." Does that mean they made an offer to settle for $12k before you turn over the financials or they would settle for that pending results of the financials? It might make a difference.

You probably have a claim against the partner, but a lot depends on what the debt was for. If it was for the business but the business went bad, and if your partnership docs provide individual immunity, you may be out of luck. You should bring all the documentation to a lawyer for review. It may be worth a few hundred bucks if it means you save $12,000.

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Answered on 12/01/08, 5:17 pm


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