Legal Question in Business Law in Massachusetts

: Dissolving of partnership

One of the options that you have is to seek after filing suit an order attaching the proceeds, and a stand-still order on the use of the proceeds.

While the ultimate remedy may take some time, the action may stop your share-holder/partner over the short-run.

If you need such assistance, contact me.

Re: Dissolving of partnership

First, you do not have a partnership, you are a minority shareholder in a corporation.

Second, assuming the company is liquidating, the controlling shareholder, who I presume is President of the company must account for the funds taken from the Corporate account.

You can file suit and ask that a receiver be appointed or you can file suit and ask that the corporate funds be restored to a company account and that signature of both of you be required to make payments. There is no guarantee you will win absent a clear indication of such a requirement in the corporate by-laws or resolution.

In the end it is a matter of cost. It is also a matter of what your shareholder agreements, by-laws and corporate resolutions say. If you hired an attorney to mediate between you both, then he can't represent either of you. If he is your attorney, I would have to defer to his judgment as he is more familiar with the facts of the matter.

Without more information, it is difficult to know what to advise. If your "partner" simply opened a new account for the corporation with him as sole signatory, baring a corporate resolution to the contrary there is not much you can do. However, if he placed the funds in a personal account in his name that probably is prohibited unless there is a valid reason for same.

Good Luck.

Re: Dissolving of partnership

Your lawyer should have asked and determined whether your partner's asset diversion was done to evade liability to you during the dissolution, in violation of the Fraudulent Conveyence Act. Sounds like it to me. While a civil suit might be necessary to un-do the transfers as fraudulent conveyences, your lawyer could probably 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 would qualify for obtaining 2 or even 3 times your actual damages, plus the recovery of your attorneys' fees for your troubles. With that kind of fire-power available to you, I question why your lawyer is saying there is nothing you can do.

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.