Legal Question in Business Law in Texas

Hi,

I just started a small internet business company. I have started an LLC with one other partner. Unfortunately I want him to step down and/or leave the company.

We have registered the business with the Texas secretary of state, but we haven't yet signed an LLC agreement. We just verbally said we will split the company 80/20, 80% for me and 20% for my partner. But again we have not officially signed anything. Additionally at this moment the company has not yet started its operations, and or conducted any form of business. So in my opinion our company has no current value, or it�s not worth anything. We were in the midst of building our website and after some arguments with my partner I do not want him to be part of the company anymore.

Furthermore the business idea was mine, and at the time it seemed to be a good idea to include my partner. So my partner has dedicated some of his time in the building process of the company for the last six months. The verbal agreement is that he would be consulting me on IT perspective and manage It perspective of our website. Also verbally we agreed he would pay 20% of business expenses, which he hasn't paid one penny yet. We always verbally agreed he would pay me back in the near future.

Here is a quick summary:

-The business is registered under my partner�s name and my name.

-We have not signed any form of LLC license agreement contract. Only had Verbal agreement on I own 80% of the business and participate in 80% of the business expenses. And my partner 20% ownership, and 20% shared business expensive.

-till this day I have paid 100% of company expenses.

I cannot consult our attorney because she represents us both, I do realize at this stage, I should of got myself my own attorney.

So what are my options? How can I have my partner step down from the company before using a judiciary process to resolve this issue.

Appreciate your help and advice!


Asked on 6/07/14, 2:14 pm

2 Answers from Attorneys
Steven Frankoff Law Offices of Steven Frankoff

Short answer - BY AGREEMENT. If he is agreeable, I can draw up a transfer agreement.

NEXT: Formal Dissolution: dissolve the existing LLC, Since you placed all of the capital in; and have the idea is yours, you should be able to just start again. But he might have some legal recouese.

Ignore the LLC and just to business under a new name... All you have done so far is a mere registration process.

Now let me explain something to you, other then by agreement and release, the other options do open you up for some liablity. Not so much because of the agreement but because of the particulars of what has been done to date, much of which I do not know.

This is as far as I can go in an open forum. This response is NOT an agreement to represent you, nor is it legal advice. What it is is a general explanation of the law, and a generalized conversation.

If you want to explore this further call me at 281 704 6740/ email me at [email protected]/ [email protected].

This is what I do, almost all of my clients are start ups, or small business entities, although most of them become large once we work together. Good Luck

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Answered on 6/07/14, 2:45 pm

Your best non-judicial remedy is to get your partner to agree to leave the business and release any claims against you and the business. You would probably have to offer some kind of buyout package.

You can also formally dissolve the LLC but dissolving the LLC requires following a particular process and you may open yourself up to liability on various claims. If that is something you are considering then you definitely need to have counsel to represent you in this process.

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Answered on 6/08/14, 8:46 am


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