matallman1
Junior Member
What is the name of your state (only U.S. law)? California
My partner and I are 50%/50% in an S-Corp that provides admin services to hospitality companies. We have been in business for almost 2 years. When we began, we did not do any form of operating/shareholder/partnership agreement. Long story short, I was the one with the expertise and industry knowledge, he invested "sweat equity". I was focused on building the business, he was going to be handling operations. I took payments before him in order to make ends meet to the tune of about $50K in excess of his distributions (we have been taking equal draws since 1/1/2015). The long and short of it is I was able to get a ton of business on the books, with a bunch more on tap. We are having trouble servicing it though, because he is just not good enough to make it happen. So our clients are getting frustrated, and we are in danger of losing clients because he is not able to perform at a level required for us to succeed. I want to separate from him, and go out on my own. His chances of surviving without me are minimal at best, so I know even if we split up the business on books, and I give him my shares, he will fight me. I'd like to avoid having to owe him any money (he insists that he's owed back pay, even though we never agreed to that), and am willing to walk away almost entirely. Problem is many of the current clients wouldn't stay with him even if I "gave" them to him. I feel trapped because I know he will get litigious (he's threatened it before during very minor arguments). What are my options? I don't know if it's a good thing or bad thing that I don't have an agreement.
My partner and I are 50%/50% in an S-Corp that provides admin services to hospitality companies. We have been in business for almost 2 years. When we began, we did not do any form of operating/shareholder/partnership agreement. Long story short, I was the one with the expertise and industry knowledge, he invested "sweat equity". I was focused on building the business, he was going to be handling operations. I took payments before him in order to make ends meet to the tune of about $50K in excess of his distributions (we have been taking equal draws since 1/1/2015). The long and short of it is I was able to get a ton of business on the books, with a bunch more on tap. We are having trouble servicing it though, because he is just not good enough to make it happen. So our clients are getting frustrated, and we are in danger of losing clients because he is not able to perform at a level required for us to succeed. I want to separate from him, and go out on my own. His chances of surviving without me are minimal at best, so I know even if we split up the business on books, and I give him my shares, he will fight me. I'd like to avoid having to owe him any money (he insists that he's owed back pay, even though we never agreed to that), and am willing to walk away almost entirely. Problem is many of the current clients wouldn't stay with him even if I "gave" them to him. I feel trapped because I know he will get litigious (he's threatened it before during very minor arguments). What are my options? I don't know if it's a good thing or bad thing that I don't have an agreement.
