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Major Problems with Partner in FL Corp.

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My husband and a partner started up a corp (inc., nothing special) a few months back. They did not write any by-laws for the officers, them, and this is where the problem lies now, I believe. Partner (president) owns 51% of the company and my husband (vice-president) 49%. When they started, the partner was able to get the finances necessary (himself $40k, his father $30k). They used the money to buy the equipment for the business, everything they bought is in the company's name. It started picking up, but due to a technical set-back they had to get more financing ($11.5k), again found by the partner. At this point the partner demands that my husband shares in the financial burden and comes up with $40k or my husband is out. We are unable to come up with such an amount. My husband worked for the company for the last 6 months, without salary, and we had to go in debt to survive. The prognosis for the remainder of the year is again no salary for either of the officers until probably sometime beginning next year. That is impossible for us to do. So, the answer seems out. The partner sees all the long hours and work my husband put in the company during the past months as a "loss" for us, "unfortunate" - to use his words. We are thinking, we should at least be able to recover something? What are our options?TIA!!!


Senior Member
Let this be a lesson to all readers.. DO NOT invest (time or money) into any partnership or corporation without CLEAR and AGREED TO terms and conditions!!!

First, my comment: I can fully understand the majority partners position. So far, he has arranged 100% of the corporate financing, to the tune of $81,000.00 and your husband has only invested six months of his labor (I assume that the majority partner has also invested labor without compensation). If these are true, I think that I would say that there needs to be some 'mutual' understanding of the funding also.

Now, with my opinion out of the way, some thoughts:
1) Your husband owns 49% of a corporation. I see only two ways that he can be booted out. Either he sells his ownership stake to a buyer (person or the corporation) or the corporation can be dissolved and the assets dispersed to the shareholders. I think that this puts your husband in a fairly good position... as long as the value of the corporation is protected. Your husband needs to consult an attorney familiar with corporate structure and law. He also needs to formalize his demands for compliance with your states Corporation Laws (By-Laws, Meetings, etc.).
2) In the event that you are able to come up with the funds (loan, refinance property, etc.) make damn well sure that there are By-Laws and agreements made to preclude ANY of these problems from re-curring.

Steve Halket
Judgment Recovery of Houston
[email protected]
This is my PERSONAL OPINION and is not legal advice! Consult your local attorney for your specific situation and laws!

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