Legal Question in Business Law in Minnesota

Re: Partnership

The old loan vs. equity issue.

I will want more background informtion to fully advise you but this issue has arisen for me with some regularity over 25 of practicing business law. Call or email to set up meeting.

Re: Partnership

Thank you for the post.

It is never to late to reform business forms or to agree upon documents that cover bueiness governance issues. In other words, you could seek to maintain the business in co-ownership, but, in the process, reform the business to take advantage of limited liability and tax issues, and set guidelines to determine how it will be operated.

If you are intent upon dissolving the business partnership, there are a great many pitfalls to avoid. Perhaps the biggest threat is anypersonal liability that you may have for buisiness debt. if you signed on a lease, busines scredit card, revolving line of credit, distributership agreeement or any other contract, you could still be liable to the creditor on those debts even if you leave the business. Accordingly, you must protect yourself with appropriate contractual agreements which spell out any indemification agreements and/or remedies if breached.

With regard to a buy out of your interest, it would be based on any price that can be agreed upon by the parties or on the existing value of the business presently.

There are many things to consider and you would be wise to consult with counsel. For a consultation call us.

Re: Partnership

Dissolution of the partnership?

The issues raised in your question are fairly common among small business partnerships that do not work out -- whether because of management or other issues.

You can clearly choose to dissolve your partnership, which it appears has already occurred in practice, but cannot necessarily expect that you will recover the $70,000 you invested in this business at start up. Dissolution of the partnership does not guarantee the return of your investment.

As an alternative to dissolving the partnership, you could attempt to refine your management agreement and try to revive the business in another form, with an appropriate agreement, of course. In the meantime, however, beware of your continuing liability for debts of the business. Without any other agreement, the law will presume that debts incurred by your partners are your joint liability, and for this reason alone, it may be prudent to dissolve the partnership.

Many more facts are necessary to evaluate your question. You would be well advised to consult an attorney about this matter. You may feel free to contact me if you require additional information. Contact information is below.

Thank you for your question. Good luck.