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Fighting within LLC Members

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metalcoat

Junior Member
NY State.

To keep things generic, my brother and I have purchased a business in which he was to run the day to day. We both own %50 of the company. He invested 36,000 and I invested in approximately 6,000. All financial agreements are in my name as he had no collateral or credit. I had a job of my own and was to only help out and get things like website/it etc. done, when I had time.

We got into a disagreement about a girlfriend of his who does not have a job and would linger and answer the phones. I have known her history with drug abuse and have witnessed her inability to complete simple tasks. Let me state that she was never an employee of the company nor was she being paid. After about 2 weeks of this and an argument with my brother about how we should be doing things I walked out. I didn't want to accuse her directly in front of employees and my brother without direct evidence of drug abuse. There are several types of equipment where she could hurt herself and I feel we could be at blame since she isn't on the payroll.

I have since confronted my brother via text message about not wanting her there, etc. He basically admitted to me (though not directly), that what they do is none of my business. I know for a fact that he does smoke marijuana and I have witnessed this. This drug isn't entirely a deal breaker for me but the fact he is doing it on the job is another story. The drug I am worried about is much more serious and detrimental to his health.

He had originally agreed that she will not be allowed within the premise, but after a few weeks I found this out to be a lie. I had agreed to that only because I agreed that I wouldn't return. I don't have any idea of what is going on financially right now and he has been less than willing to share information. If I take legal action do I have a leg to stand on? What options do I have at this point? He originally agreed to cameras but not he is fighting that issue as well, saying that he is working on a scenario where he can buy me out. The bank does not allow that to happen unless they are paid off first. He thinks that paying me off will rid me of this situation but I don't want to take the money and run unless the financial burden is removed from my name.

Please Help.
 


Dave1952

Senior Member
You mention a financial burden but do not describe it, what are you talking about? I'm guessing that you borrowed a lot of money for this venture.
 

latigo

Senior Member
NY State.

To keep things generic, my brother and I have purchased a business in which he was to run the day to day. We both own %50 of the company. He invested 36,000 and I invested in approximately 6,000. All financial agreements are in my name as he had no collateral or credit. I had a job of my own and was to only help out and get things like website/it etc. done, when I had time.

We got into a disagreement about a girlfriend of his who does not have a job and would linger and answer the phones. I have known her history with drug abuse and have witnessed her inability to complete simple tasks. Let me state that she was never an employee of the company nor was she being paid. After about 2 weeks of this and an argument with my brother about how we should be doing things I walked out. I didn't want to accuse her directly in front of employees and my brother without direct evidence of drug abuse. There are several types of equipment where she could hurt herself and I feel we could be at blame since she isn't on the payroll.

I have since confronted my brother via text message about not wanting her there, etc. He basically admitted to me (though not directly), that what they do is none of my business. I know for a fact that he does smoke marijuana and I have witnessed this. This drug isn't entirely a deal breaker for me but the fact he is doing it on the job is another story. The drug I am worried about is much more serious and detrimental to his health.

He had originally agreed that she will not be allowed within the premise, but after a few weeks I found this out to be a lie. I had agreed to that only because I agreed that I wouldn't return. I don't have any idea of what is going on financially right now and he has been less than willing to share information. If I take legal action do I have a leg to stand on? What options do I have at this point? He originally agreed to cameras but not he is fighting that issue as well, saying that he is working on a scenario where he can buy me out. The bank does not allow that to happen unless they are paid off first. He thinks that paying me off will rid me of this situation but I don't want to take the money and run unless the financial burden is removed from my name.

Please Help.
If the stalemate continues and you are determined to end it, then you need to have your personal attorney review the Operating Agreement and advise.

Since you do not hold a majority of the percentage of ownership, it may that your only legal option will be judicial dissolution pursuant to Article 7 Section 702 of New York's Limited Liability Company Act.

The downside of that is the costs in legal fees which would undoubtedly far exceed your investment.

Perhaps once you brother is made aware of your ability to bring about dissolution through court intervention - and the fact that it could put him out of job - a less expensive solution could be reached.
 

metalcoat

Junior Member
Yes the financial burden is a mortgage SBA loan that amount to nearly a quarter of a million dollars. And I will do that today I appreciate all the information!
 

Zigner

Senior Member, Non-Attorney
Yes the financial burden is a mortgage SBA loan that amount to nearly a quarter of a million dollars. And I will do that today I appreciate all the information!
Whoa there - is the loan to YOU or the LLC? And, if to the LLC, are you a guarantor on the loan?
 

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