lots of problems

tnj1989tnj1989 Posts: 1subscriber
edited September 2008 in Watercooler Talk
We are part owners in a small business. My husband owns 33% of the business and is the vice pres. His partner the president and CEO of the company runs all of the money end of the business. My husband is always out in the field doing the labor. He never finds out what kind of deals his partner is making until after the fact. My husband isn`t even on the checking account for the business. If his partner makes bad money decisions, borrows money from people and writes checks for money that isn`t even in the companies account and does this all without my husbands knowledge is my husband responsible for this even though he doesn`t know about it?  We want to just leave the business, but we feel that we are stuck.  His name is on the building rental for our business. If we file bancruptcy are we stuck with the money we owe for the building? The rent is late alot.  Do we have any rights?  We have the problem of not having enough money to pay payroll for the employees, pay the taxes, pay the owners,pay the rent. If we don`t pay our employees everyone will leave so sometimes they pay the employees to keep them and don`t pay the bills. Again my husband has no part in that part of the business. He basically is like an employee but on paper he is an owner. He never hears about what his partner is doing until after the fact.

Comments

  • vwebworldvwebworld Posts: 40subscriber
    Sounds like a poor situation. But the answer to your question depends upon how the business is structured.
     
    Is legally set up as a partnership or corporation? If so, there are legal documents which should specify ownership %, profit %, or shareholders, etc. 
     
    If it was set up properly, there should have been a buyout agreemtn prepared in anticipation of a partner (or major shareholder) leaving the business or passing away.
     
    Also, I can not tell you if is it proper for that other owner to enter into agreements with out a partner`s "ok".
     
    When you say "his name is on the building rental" do you mean he rents (is the lessor) the building to the business or his name is show as the person leasing (the lessee) the building?
     
    Partnerships and closely held corporations are like a marriage... there needs to be good communication between the parties for it to work.
     
    In general, if your husband does have any legal interest (ownership) in the business, he should sit down with the other person and talk about the direction of the business and the cash flow problems you`ve noted.
     
    In a bankruptcy you may or may not be on the hook for unpaid expenses - again , depending upon the structure of the business.
     
    ~Roland
  • tnj1989tnj1989 Posts: 1subscriber
    I believe it is set up as an s-corp. His name is on the paperwork as part of the person leasing the building. Him and his main partner are leasing the building for the business from another person. We have three other partners but they don`t own as much of the business. My husband and the other partner who is the president are the main shareholders of the business. The other partners are not on the lease agreement. My husband`s name is not on any of the work vehicles, or the checking account. His business partner will borrow money from people and promise to pay them back. But that doesn`t always happen due to lack of funds. My husband and the other partners are never informed of these transactions until after the fact.They have never been involved in deciding to do this.
  • WeblineWebline Posts: 13subscriber
    Sounds like the majority owner should be on his own, since he won`t inform anyone of anything .... pretty reckless behavior .... I would suggest going over the original partnership contract and reviewing it to see what actions or responsibilities are being violated, if any .... if it was me, I`d be looking for a way out.
  • stonesledgestonesledge Posts: 8subscriber
    I have learned that we teach peope how to treat us. Your husband needs to step up, confront and put some sytems in place where things are voted on , including the money that is spent. I would seek the advice of an attorney, if you want out.
     
    Erin
  • vwebworldvwebworld Posts: 40subscriber
    Assuming from what you say this is a Corporation and your husband and another are the main shareholders, then they have the authority (unless otherwise relinquished) to hold employees and other shareholders responsible for their actions.
     
    Just because some one is an employee or shareholder does not give them the authority to act on the company`s behalf or create a contractual relationship between the company and another party. So, any agreement or contractor lease the this person entered into is not necessarily binding on the company UNLESS they were specifically authorized to do so (either through Board of Directors vote or Director by the President - assuming the Pres has the authority to enter into contracts).
     
    Perhaps just as concerning is the apparent lack of concern or understanding by the "partner" of the financial situation of the company.
     
    ~Roland
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