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What steps should I take when business partner suddenly put company in LLC, only under his name?

Houston, TX |

I open a company under a Texas DBA till business partner finish filing bankruptcy. For the first 1 1/2 year
we file under just my name in the DBA. Then suddenly he moves the company into a LLC and only under his name. The company has the same name in the DBA and the LLC that is now. What rights do I have. Should I get him to sign a promissory note in the amount of share that was agreed upon? Please help.

Attorney Answers 6


  1. Your partner is breaching his "fiduciary" duty to you, his partner, and that means he's exposed to a "tort," which could mean you could get punitive damages against him, as well as compensatory damages for the amount he owes you.

    See a business litigator ASAP to discuss the facts of your situation.

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  2. Your partner is breaching his obligations to you. You should immediately see a lawyer to help you handle this situation, as you are being taken advantage of by your partner. Use Avvo find a lawyer feature to locate a business lawyer who is not afraid to go to court to enforce your rights. Good luck.

    The content of the this submission is intended to provide general information on the topic presented, and is offered with the understanding that the author is not rendering any legal or professional services or advice. This submission is not a substitute for legal advice. Should you require such services, retain competent legal counsel.


  3. You need to see a business litigation attorney an an IP attorney. As noted by my colleagues, your partner is not legally permitted to cheat you out of your share. in addition, he is likely infringing your opp rights since the business was under your name. You need to take steps to register the marks involved in your name for leverage in this situation. That promissory note from a bankrupt individual is not likely to be sufficient. send, unless this partner is crucial to the business, you likely should find a new partner.

    I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.


  4. You probably need an injunction against your "partner" using your business name, and to recover whatever property he's taken for himself in the process. Although getting an ownership interest in the LLC may be a remedy, a promissory note is not the correct way to get it. I'd want to see whatever paperwork you have that describes what was supposed to happen, and also take a look at the partner's bankruptcy to see if his interest in the business was properly disclosed to the bankruptcy trustee.


  5. While the advice from my colleagues is basically correct, something doesn't sound right here. If you have an active DBA in any county in Texas, the Texas Secretary of State (SOS) should not have accepted formation papers for an LLC with the same name. Typically the SOS will check county DBA records as part of their process. I suggest you check the SOS online records to see whether there really is an LLC with the same name as your DBA.

    I also suggest you find a business attorney to further investigate.


  6. I agree with the other contributors in this thread. Based on the information provided you may have breach of fiduciary duty, civil fraud, breach of contract and other claims against your business partner. Do you have some sort of operating agreement or other written agreement stating your rights as to the Texas DBA or your business relationship? In any event, based on your “partner’s” conduct and financial situation, I am concerned you may ultimately be unable to collect on a promissory note. Definitely consult with a Texas business or commercial litigator before accepting a promissory note, entering into an agreement with this individual or taking further legal action. Best of luck.

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