Legal Question in Business Law in New York

Sale of business

I own 33% of a Sub. S corp. that does business as a retail store. My partner is my brother. I am the V.P., he is the Pres. I have a need to no longer be with the store. He does not want me to leave and will not buy me out. After a recent expansion, we have debt, some of which is personally guaranteed, some is not. Our lease has 30 months left. I have told him that in no case will I sign a new lease, which our landlord will require, in order to force my brother into action. I have a party that may be interested in purchasing my share. My brother has indicated several problems which I don't think are real. Before I hire an attorney I wanted some opinions. Thank you in advance for any help. First, he says that I will have to come up with money to cover my share of the debt. I understand that if the business fails, the creditors will come after both of us, but I don't think I have to come up with these monies just to sell. Next he says that I can't just leave, that I have a legal obligation to make sure there are people who can do my job. Last he says that I can't just sell to anyone, that he has to approve of them. Our partnership agreement allows for him to match any offer, but no other language about selling. Thanks


Asked on 5/23/08, 8:17 am

4 Answers from Attorneys
Michael Markowitz Michael A. Markowitz, PC

Re: Sale of business

Q. First, he says that I will have to come up with money to cover my share of the debt. I understand that if the business fails, the creditors will come after both of us, but I don't think I have to come up with these monies just to sell.

A. No. You do not have to pay the money just to sell. Debt will be paid from the proceeds of the sale, with the net money (if any) to be divided 33% you and 66% brother.

Q. Next he says that I can't just leave, that I have a legal obligation to make sure there are people who can do my job.

A. I do not know the language in your shareholders' agreement. However, if can always break a contract - knowing that you may be responsible for damages.

Q. Last he says that I can't just sell to anyone, that he has to approve of them. Our partnership agreement allows for him to match any offer, but no other language about selling.

A. I would have to read the shareholders' agreement in order to form an opinion.

Mike.

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Answered on 5/23/08, 8:25 am
Carlos Gonzalez Gonzalez Legal Associates PLLC

Re: Sale of business

The partnership agreement is th ultimate controlling factor... this will control what your obligations are.

Feel free to contact our office for a free phone consultation at 212.709.8303

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Answered on 5/23/08, 9:47 am
Christopher Hoyt The Law Offices of Christopher W. Hoyt

Re: Sale of business

It would be to your benefit to retain an attorney to review your partnership agreement and render an opinion on your options. The partnership agreement may contain restrictions on the methods that you can use to sell your interest in the business.

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Answered on 5/23/08, 11:05 am
NEAL SPECTOR, ESQ. NEAL S. SPECTOR, P.C.

Re: Sale of business

With all due respect, the underlying entity is a corporation. Accordingly, you and your brother are not partners and the "partnership agreement" referred to is likely a simplified "Buy-Sell" or "Shareholder Agreement."

Although your brother is incorrect in his opinion, there are numerous issues involved with the sale of a minority interest in an ongoing business especially with the liabilities you mentioned. Those issues must be addressed and resolved if you want peace of mind in your future.

You are welcome to contact me to schedule a free consultation: [email protected].

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Answered on 5/24/08, 6:27 pm


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