Legal Question in Business Law in Georgia

Is money due for work done if I'm a partner in an inc. that is going under?

background- 7 people start a business (they are incorporated)and into the 3rd year they begin having financial problems and one by one the owner/shareholders begin to drop out of the company. We're down to 3 principles, the CEO, CFO and CTO. The CTO has not received any compensation for work done in the past 6 months the CEO and CFO were paid for 4.5 of those 6 months (employees were not paid from time to time). They have found new investors and want to continue one of the projects they've been working on the past year (before the problems) and said the CTO will be paid monthly when work resumes.

Can the CTO/shareholder demand payment for past works (this is IP / network configurations / 1 provisional patent we're dealing with) before agreeing to move forward with them on this project? Does the CTO have a legal right to refuse to continue to work on this project if there is no agreement to pay back salary if there has never been a signed non-compete or salary agreement by the CTO? Can ''the company'' force the CTO into a non-compete or to continue working on this project? What options does the CTO have if ready to walk away from the failing company to further their own career?


Asked on 8/25/05, 5:08 pm

2 Answers from Attorneys
Jeff Kent Kent & Merritt, P.A.

Re: Is money due for work done if I'm a partner in an inc. that is going under?

Is there a shareholder's agreement that would dictate how you can leave the business?

Is there anything in the bylaws or other agreements that would cover such situations?

If not, it may be as simple or complicated as negotiating with the other two remaining officers and new investors.

Obviously, more information would be necessary for an attorney to give you any real advice. You should speak with an attorney before you sign anything, however.

The forefoing is general information only, not specific legal advice. No attorney/client relationship has been created or should be implied.

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Answered on 8/25/05, 5:29 pm
Glenn M. Lyon, Esq. MacGREGOR LYON, LLC, Business Attorneys

Re: Is money due for work done if I'm a partner in an inc. that is going under?

It sounds like you have a number of issues that need to be fleshed out. I would need to review the relevant corporate documentation regarding shareholders to give you more complete answers to your inquiries.

You cannot retroactively have an employee sign a non-compete; however, he would owe a heightened duty to the company by virtue of being an officer, and this duty may preclude certain competing activities with other ventures. Most other rights and duties should be addressed in the S/H agreement(s), by-laws, etc.

If you would like to discuss any issues further, please feel free to contact my office. My contact information is below. Thank you.

The foregoing is general information only, not specific legal advice. No attorney/client relation has been created or should be implied.

Glenn M. Lyon, Esq

MacGregor Lyon, LLC

Promenade II

1230 Peachtree Street NE

Suite 1900

Atlanta Georgia 30309

Phone 404.942.3545

Fax 404.795.0993

[email protected]

www.macgregorlyon.com

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Answered on 8/25/05, 5:38 pm


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