Legal Question in Business Law in Massachusetts
business law for an LLC company
My husband has a business, an LLC and his partner has been taking money from the business and not paying bills for the business. In an LLC is there any recourse my husband has? His partner did not pay any bills for a full year, and my husband has not taken a salary for a year. Of their initial investment, my husband has not received any of the start-up money, but his partner felt the need to ''take '' his back without telling him. Some bills are in my husbands name. His credit is slowly being destroyed and his partner has gotten away with this. Is there anything we can do? We are trying to sell the business now and just be able to pay off everything, but to catch up we will need to use our personal savings, or even take a loan, and the partner is contributing nothing yet, he took everything. Thank you very much for your time.
3 Answers from Attorneys
Re: business law for an LLC company
You need to determine whether the partner's asset diversion, etc is being done to evade liability to you during the dissolution, in violation of the Fraudulent Conveyence Act and/or the MA Business Corporation Law. Sounds like it to me. While a civil suit might be necessary to un-do the transfers as fraudulent conveyences, you might be able - through counsel - to obtain an immediate injunction freezing the partner's assets, preventing him from making further divestitures, and ordering the fraudulent conveyences un-done so you have access to the assets.
Since your partner appears to have blatently violated his fiduciary duties of utmost good faith and loyalty to you, you probably stand to recover your attorneys' fees for your troubles.
Freezing assets and unravelling fraudulent conveyences is complicated legal work and labor intensive; lots of lawyers either don't know how to go about it, or don't have the time. I have been down the road more times than I can count; and I make time for client emergencies like this appears to be. Once the money is gone, usually its gone. I consider that an emergency. You have tremendous leverage available to you. Let me know if you want to use it.
Re: business law for an LLC company
Yes, assuming he is a Manager or even only a partner, he can sue the partner for wrongful conversion of company funds and theft.
Your husband should contact an attorney as soon as possible.
business law for an LLC company
1. Stop the partner's access to all accounts;
2. Inform all vendors that the partner does not have permission to act in the behalf of your husband, or the LLC;
3. File suit.
If you have any other questions, please contact me.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
