Legal Question in Business Law in Minnesota

S-Corp Sitiuation

I am 50% partner in a Minnesota S-Corp. My partner and I have and joint home equity loan that takes our homes as colateral. We use this loan for the business.

My partner wishes to take over the business and I require that he take over the above loan in full in order to acquire my shares. His lawyer has advised against doing this and telling the bank about the disolution of the partnership. As of yet I have not received explanation.

Any advise or explaination for the advise my partner received?

Thanks

Kevin


Asked on 5/01/03, 5:38 pm

1 Answer from Attorneys
Vincent W. King Vincent W. King, PA

Re: S-Corp Sitiuation

This is bad advice from your standpoint. You may not be able to get off the personal guarantee, but at least you will cut off any subsequent liability for further debt incurred. I do believe to protect yourself the bank needs to be advised of the transition on the business and arrangements need to be made to ensure that payments on the debt are being made. Also, there is no need to dissolve the corporation; a formal buyout agreement for the stock can be negotiated.

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Answered on 5/01/03, 5:59 pm


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