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Corporate Partner with BAD Credit

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R

RV

Guest
I am setting up a corporation (LLC) with 2 other people. One partner has 6 figures of previous unpaid debt (IRS, child support, you name it) but he is vital to the business. I cannot afford to have outside entities forcing a valuation of the business and forcing a sale of his shares. Is that a risk? How can the remaining partners protect ourselves? I've thought perhaps having a long term contract and pay him a share of revenues -- no ownership.
 


T

Tyrone

Guest
Lots of possible approaches, such as options, perfomance based options, long term profit share, his filing for bankruptcy now and wiping out some of the debts, etc. but this needs careful lawyering.
 
I

IndNewsSrv

Guest
Usually one persons debt does not affect another person,unless there was a joint account (i.e spouses)Now what happens with partners is on taxes they file a K form (somethign like that) that files there own separate taxes without having other names involved. So if your worried about the IRS or a judgement lien against you or the company..that will most likely not happen. Worse case,they will garnish his wages but it'll be whatever money he makes.Also he will most likely not be able to help you guys in credit. Hope this helps.

Cynthia
 

BusiTom

Junior Member
Usually one persons debt does not affect another person,unless there was a joint account (i.e spouses)Now what happens with partners is on taxes they file a K form (somethign like that) that files there own separate taxes without having other names involved. So if your worried about the IRS or a judgement lien against you or the company..that will most likely not happen. Worse case,they will garnish his wages but it'll be whatever money he makes.Also he will most likely not be able to help you guys in credit. Hope this helps.

Cynthia
Does this hold true to this day in 2011? Just curious because I know sometimes things change in 10 yrs.
 

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