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LP P/G Lawsuit Question I am being sued by a debt financier for a personal guarantee agreed to by 4 partners, 2 who sold off
Dallas, TX
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Posted about 1 month ago in Lawsuits / Disputes
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I entered into a Texas LP agreement with 3 other partners. During the course of the business we required capital. The 2 majority shareholders (They owned 70%, I owned 20%) decided that we would seek private debt capital. I disagreed but was told we needed it and I needed to sign also or the doors would close. We signed an equal and severable personal guarantee to a lesser portion of that debt.
11 months ago they sold off their stock to the debt financier w/o my knowledge or agreement. He then took over managing the company and terminated me earlier this year and stated he now owned my stock as I was terminated for cause according to the partnership agreement. The partnership agreement states cause is defined by the employment agreement. No employment agreement, NDA or Non Compete exist
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Now he is suing me for the entire amount that we had personally guaranteed and demanding my IP and stock rights. I have hired counsel but would like straight input which is not so ultra conservative. Answers (1)
Lee Keller King
This attorney is licensed in Texas.
Posted about 1 month ago.
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First of all, it is impossible to give you an extensive answer without having reviewed a copy of the partnership agreement, the personal guarantee and other relevant documents. The language of the agreement and personal guarantee will likely be determinative of your rights.
Did the partnership agreement limit the ability of the other two partners to alienate or otherwise dispose of their shares? Was there any provision for giving right of first refusal to the remaining partner (you) before disposing of the shares? It is possible that, depending on the language of the agreement, you may have an action against the two partners that "bailed" and may therefore wish to join them in the law suit. As for your firing, if there was no employment agreement then I do not see how you can be fired for "cause" as defined by the non-existent employment agreement. On the flip side, Texas remains an "at will" state and without an agreement, your employer does not need a reason to fire you, as long as he is not doing it for an illegal reason. Is the new owner claiming that you must forfeit your shares and IP rights because of the non-existent employment agreement? Or is he asserting that you must do so under the partnership agreement? Does the guaranty you signed pledge your shares and IP rights as part of the guaranty? Also, (although this answer only touches the surface), what was the value of the shares surrendered by the two the majority shareholders in return for (I assume) forgiveness of their debt? The lender is not allowed a double recover, but may nonetheless may be trying to double dip by taking your shares and IP rights. FInally, I do not know how long your current attorney has been pursuing this matter, but I suggest you discuss these matters with him before firing him and seeking other counsel. These matters have a life of their own, and it sometimes seems to the client that they are dragging on when they are really proceeding at the normal pace. Good luck with your case. Lee Keller King
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