Legal Question in Business Law in Illinois

Loan vs Investment

My brother was an investor in my business. the business has since failed and now 1.5 years later my brother is saying that the investment was really a loan and is suing us for 50K. the argument is that it was an oral loan agreement which is untrue. There is nothing in writing except a few cancelled checks made out to the business which was a s corporation.

Does he actually have a chance to win this case? Any suggestions??


Asked on 1/27/07, 8:33 am

2 Answers from Attorneys
David Slater David P. Slater, Esq.

Re: Loan vs Investment

yes. Retain me to defend you. Do not ignore the summons

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Answered on 1/27/07, 10:19 am
David K. Staub Staub Anderson LLC

Re: Loan vs Investment

Did you issue your brother a K-1 from the business? Do you know if he reported the gain or loss on his own tax return? Was a stock certificate issued to him? Did he sign resolutions of the shareholders? Are there any third party filings that show that he was a shareholder (such as reports to the secretary of state)?

There are many ways you can show he was an investor. However, if you didn't do the things you should have done to reflect him as a shareholder in the corporation, you are going to have a higher hurdle to overcome.

You need an attorney who is well versed in corporate law. Talk to several and find one that seems to know what he is talking about. For tips on selecting an attorney, see "Selecting a Business Attorney" at:

http://www.illinoisbusinessattorney.com/articles/selecting_business_attorney.html

Good luck.

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Answered on 1/27/07, 3:01 pm


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