Legal Question in Business Law in Missouri

Incorrect accounting devalued my shares

I recently advised my partners that I was leaving. Our contract calls for them to purchase my 49% ownership interest. They have taken the position that the company is worth nothing because the tax returns show losses. In reality the company has always shown a positive cash flow but they were accounting for it incorrectly. The net effect was that they were transferring losses that they were incuring in another company that they own (I don't own any part of the other company). I have memos going back a couple of years explaining this to them to no avail.

The contract calls for an appraiser but they have refused to even entertain this because of their position with the tax returns. What is my recourse?


Asked on 9/22/03, 4:45 pm

1 Answer from Attorneys
Spencer Farris The S.E. Farris Law Firm

Re: Incorrect accounting devalued my shares

If the partnership agreement calls for an accounting, that is the recourse you have- unfortunately, it sounds as though your partners are not going to go to this option willingly. A more important concern may be to make sure that they do not waste the company or transfer assets in the interim.

It is impossible for me to offer advice without seeing the contract and knowing more about the company, its business, assets (including goodwill) and so on. While there are many practical concerns, the contract controls dissolution/buyout if the contract covers those issues at all.

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Answered on 9/22/03, 4:58 pm


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