Legal Question in Business Law in Minnesota
Business Partnership
RE: Mortgage company, 2 partners, been in business approx 5 years. CEO put in $100K as start-up money(not refunded), and with an extensive business background runs most facets of the business, does small amount of loans. President brings in some people and business at the start, does loans, handles some aspects of sales org. Both receive equal salary. Business good for a couple of years, then declines, CEO puts money in to pay salaries, bills etc. Business is slow, President does 1-2 loans per month the last couple of years, need 15 times that to break even, some other loans come in through other employees, but not enough. Decide to sell bus. for small amount. President keeps money from sale, moves on to new job. CEO continues to work to close up shop, puts in additional funds to pay off bills etc, no salary. CEO wants President to pay back half of the money that was put in (excluding the $100K initial). The President feels that, since he brought in loans, he has already put money into the company. Who is correct?
2 Answers from Attorneys
Re: Business Partnership
It is not possible to answer your questions without having much more detail and the opportunity to review all business documents including any bylaws, shareholder or partner control agreements and understanding what other agreements the parties may have hadd. Operating a business without such agreements almost always leads to conflict.
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Re: Business Partnership
SOunds alot like a situation I am currently handling for a partner in a mortgage/real estate company. I hope you have a written partnership or Member Control Agreement. If not, I would want to interview you re: past business practices. Might be an appropriate case for mediation.
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