Legal Question in Business Law in Illinois

Re: He is a felon I want to be away from him

Unfortunately, like many business relationships, things frequently turn sour when one "partner" fails to honor the fiduciary duties he owes to the other. It happens all the time, and I personally have dealt with these types of issues on (too many) of these occasions.

Your situation would require a closer examination of the facts/evidence. In the first instance, in the beginning of your question you state that you are "partners" with the CEO and then, later, you indicate the the business is incorporated. There are legal distinctions as to whether the business entity is a partnership or a corporation.

Assuming the latter, it sounds as though you signed as a guarantor on the note (rather than simply being liable because of a "partnership"). As CEO, your "partner" (in lay terms) is obligated to run the affairs of the company prudently, and if he is wasting corporate assets by placing them in his personal account, he is breaching the fiduciary duties he owes to his shareholders and, if not authorized, he may be embezzeling.

Getting "off" of the note, however, is a bit of more difficult, since it is the lender's decision whether to let you "off" of it. As you mentioned, the lender here is the CEO's stepfather, so the issue is compounded.

Nonetheless, depending upon what the facts show, i.e., whether the CEO breached the fiduciary duties he owes to you, you may have defenses to enforcement of the note or, at least, indemnification from the CEO.

All said, the matter and your various options can be quite complicated, and a more complete answer would take not only more facts but also an examination of corporate governance law.

One thing I note that you did not mention: Is the promissory note currently in default and is the lender seeking payment from you?

-- Kenneth J. Ashman; www.AshmanLawOffices.com; [email protected]

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