Asked almost 2 years ago - Detroit, MI
FlagWe purchased a website in 2009 and are partners with 2 other people. We and another own 37.5% and the silent partner owns 25%. The site should have earned $ to pay for itself if the key advertizers hadn't left as we purchased it (the previous owner kept all $ the had pd by them up front and we are still honoring their contracts so they're ads are estentially free on our end). We purchased shirts to sell but have not sold a single one yet. Now the 25% silentpartner wants out and his ENTIRE original investment of $1250(the site was $5K pd directly to the former owner) paid back by just us. In the past 3 years he never paid us his portion of the monthly site hosting fees or shirts which total @$450. We declined to buy him out. What legal correct options do we have? We don't have$1250
There is not necessarily any obligation on your part to buy back the 25% interest. Whether or not there is depends upon the terms of the agreement.
The remedies available to the 25% "partner" depend upon the form of the business venture. Since you did not mention the formation of a limited partnership, limited liability company or corporation, it sounds as if the business venture is a partnership. In that event, the 25% partner (or the other partners) would have the option of demanding that the partnership be dissolved, the remaining assets sold, and the proceeds distributed. You mention that the 25% partner did not pay "his share" of expenses. If indeed the partners were required to make capital contributions, that partner's share of the distribution would be charged for his share of the unpaid capital contributions.
Note that this is only an outline of the issues. You have not stated adequate facts for a complete answer to be provided.
You reference a partnership, but do you really mean partnership or do you have an LLC or corporation. If you have a partnership or an LLC hopefully you have an operating agreement. In the absence of an agreement, the statute controls. If you have an LLC the statute will probably answer most of your questions. (http://www.legislature.mi.gov/(S(bqfevbeessan1m...)
Generally, the company would have to buy him out, not individuals. If he pushes, you will need to consult local counsel in Michigan.
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