He invested $30,000 towards a company I started a couple of months after I launched. On the contract, I would agree to give 11% of the company and I would have to pay it back in a year. The entire 30k and more was spent on office space and startup costs. We didn't resign the lease because the company was not generating enough money, it is now a home-based business again and is not profitable at this point. I told the investor that the company cannot pay the entire 30k at this time due to the lack of profits. He insisted that I take out a business loan to pay him and I said no, I would rather pay him what the company can afford on a monthly basis. I get a letter from a law firm stating that I must pay 5k a month for 6 months or I will get sued. What can I do?
Lemon Law Attorney
Based solely on your facts as posted, I recommend taking the offer to pay 5K a month for 6 months. They unilaterally offered to change the terms you agreed to just to make it affordable to you. Seems like a good chance to avoid a lawsuit...
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Not really possible to give a good answer absent reading the investment/loan document to determine if the LLC is solely liable or whether you were also a party either agreeing to be a co-borrower or possibly a personal guarantor. Your choice will be predicated on the answer to these questions. If you are not liable contractually then you could simply bankrupt the LLC and tell the investor/creditor to pound sand .....or if you personally are on the hook then you may want to take a more conciliatory approach and seek a forbearance greement or possibly an amendment to the loan to allow for more reasonable terms that consider your cash-flow limitations.
My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained. Please click "helpful" or "best answer" if my answer added any value or add a "comment" if you have more info for me to help you get a better answer.
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