Partnership gone bad...

What is the name of your state (only U.S. law)? Indiana

I am sure you need more details than I will provide, but I am happy to supply whatever info is needed. I appreciate anyone's advice or guidance.

My husband co-owns a business- he is a 50/50 owner. Long story short, his partner is being shady and doing very little work- they are not profitable yet- they still have lots of debt, much of which is in his own name through business lines of credit. My husband is doing ok (meaning he makes enough to pay monthly bills, but again, he still has lots of loans he is responsible for) and working very hard at making the business successful, and doesn't think it is fair that the absent partner reaps the benefits of his hard work, plus he is just very unhappy with the turn the partnership has taken. My husband wants to either leave or take over 100%- he no longer wants to work with this person. The other person is basically refusing.

Do you guys have any idea what we can do in the situation? His partner is just being so unethical with outrageous and unrealistic demands, but we have absolutely no means to just pay off his half of the debt. Plus we can't afford to just completely get screwed either.

I know it's a ong shot, but if anyone has any advice, we'd really appreciate it. We're really just so beside ourselves that a "friend" would put us in this situation.

Do you have a written partnership agreement? What does it say about dissolution or elimination of the partnership?

AlmostALawyer said:

Do you have a written partnership agreement? What does it say about dissolution or elimination of the partnership?

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I'm a little embarrassed to admit that I just learned this, but I just found out today that initially, the business contract was for two corporations- they decided about a year ago that they would close the one corporation (the one in my husband's name), just have one and they would both be 50/50. Turns out, they never actually created a legal contract for the 50/50 partnership. In fact, the corporation is still only in the other partner's name. I feel like we are poster children for failure right now.

So now, we have half of the business's debt in my husband's name and there isn't even a contract that supports the partnership.

BusinessRookie said:

I'm a little embarrassed to admit that I just learned this, but I just found out today that initially, the business contract was for two corporations- they decided about a year ago that they would close the one corporation (the one in my husband's name), just have one and they would both be 50/50. Turns out, they never actually created a legal contract for the 50/50 partnership. In fact, the corporation is still only in the other partner's name. I feel like we are poster children for failure right now.

So now, we have half of the business's debt in my husband's name and there isn't even a contract that supports the partnership.

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This might be the time to cut your losses and run even tough you'll have to take the debt he guaranteed with you.