Partnership gone bad

[Relayer100]

This is a rather long and complicated story. 5 years ago, a company called XXX company was formed by an individual (Sub S). In March of 1999, the owner asked my wife to become a partner in the business using the DBA XYZ company. All assets, liabilities, name of the company, etc of XXX company were to remain the property of the original owner. XYZ company was used to enter new markets XXX company had not previously been in. My wife signed the partnership agreement of XXX DBA XYZ company. At the time, my wife owned XYZ company. Within the agreement, it states a separate "partner account" will be established for each partner. She also had an employment agreement with XXX company as an Account Executive. To make a long story short, the original owner of XXX company, from day one refused to establish a partner account for my wife, nor allow her to access to the cash in the company, denying her bank authorization for checks, etc, as clearly outlined in the agreement. No stock certificates were issued, no board of directors vote was taken to authorize the partnership. She signed a K1 thinking it was a tax extension until all the problems were worked out. The was no partnership disbursement at the end of the year, with the owner of XXX company keeping all the previous years profits in his own account, refusing to issue a dividend. In fact, at various times, the owner of XXX company would not even pay her her agreed salary per her employment agreement. When my wife argued the facts, she was told by the owner of XXX company that he will never give up control of the company to anyone. The question is:Was my wife ever really a partner and is she liable for any XXX company situations?

 

[lawrat]

I am a law school graduate. What I offer is mere information, not to be construed as forming an attorney client relationship.

Basically, partnerships in this day and age can be a very bad idea. But, if he signed an agreement with all of these basic duties found in a partnership, then you need to get all the back compensation she is owed.

She needs to file a civil suit against him, attacking HIS partnership, at which point, it will atttack his personal assets if the partnership doesn't have enough money to compensate her.

Try attorneypages.com and also read up on partnerships at the freeadvice.com homepage.