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Business Partners dispute

New York, NY |

Recently, the relationship between my business partner and I has gone bad. Awhile ago, he took out all the money from the bank account, claiming that was his shares. We did not set up a contract at the beginning, and there wasn't a systematic bookkeeping system. (We have been using Quickbooks, but he was the one who entered the entries so I highly doubt it is accurate). Also - I suspect he might have stolen money from the business, even before he withdrew all the money from the account. Is there anything I could do in this case, to at least get a fair share of money back? Any advice is appreciated.

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Attorney answers 5


You may have a lawsuit it sounds like. You at minimum have enough to warrant a sit down with a business litigator in order to comb over the facts in more detail. The rules for winding up a business are strict, and must be complied with. Draining funds from a business is potentially both criminal and civil liability.

The amount in controversy will dictate whether you can file in small claims or another court.

Matthew Johnson phone# 206.747.0313 is licensed in the State of Washington and performs bankruptcy, short sale negotiations, and estate planning in Whatcom, Skagit, Snohomish, King and Pierce counties. The response does not constitute specific legal advice, which would require a full inquiry by the attorney into the complete background of the facts and circumstances surrounding this matter; rather, it is intended to be general legal information based on the limited information provided by the inquirer; it This response also does not constitute the establishment of an attorney-client relationship, which can only be established after a conflict of interest evaluation is completed, your case is accepted, and a fee agreement is signed. Johnson Legal Group, PLLC


Determining whether or not you have a viable cause of action (it sounds like you may have a cause of action - but that doesn't mean its necessarily worth pursing) will depend on many factors you haven't listed. Sit down with a commercial litigator. Some questions she/he will ask you are what was the agreement/relationship with your partner? Did you put any cash or goods into the partnership? Assuming you had an agreement, not having anything in writing was a bad move on your part.

The above is not intended as legal advice and creates no attorney-client relationship; do not take any action or fail to take any action in reliance.


We see many business people in our practice who are disappointed or feel cheated by their partners. The rules for dissolution and winding up corporations, partnerships and limited liability companies are state specific and can be complex. In general, employees, vendors, creditors and taxing authorities mus must be paid first before profits if any are split between the partners or shareholders or members (in the case of a LLC). The important thing is to act quickly, stop the leaks, assemble your paperwork, and arrange to see an experienced business divorce attorney who can help guide you to your best alternatives., including arbitration and mediation.

This answer is provided for information purposes only. It should not be relied upon as legal advice which can only be offered to clients in an office consultation setting when all the facts and circumstances can be fully considered and reviewed.


This is not an uncommon scenario. How you move forward, as noted by all my colleagues, really depends. What seems clear, however, is that there was money to take so at a min the specter of a case exists.

It is also not clear whether we are talking about some kind of criminal act or just merely a business dispute. The good news is that two mature responsible business people should be able to work it out. If not, you will end up in court and that will be expensive.

I suggest you reach out to a lawyer and discuss everything over in private. Most of us here, including myself, offer a free phone consult.

Best regards,
Natoli-Lapin, LLC
New York, NY
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The law firm of Natoli-Lapin, LLC (Home of Lantern Legal Services) offers our flat-rate legal services in the areas of business law and intellectual property to entrepreneurs, small-to-medium size businesses, independent inventors and artists across the nation and abroad. Feel free to call for a free phone consultation; your inquiries are always welcome: CONTACT: 866-871-8655 DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting.


You need to file an action against your partner seeking an Accounting which will result in a process of discovery where you will be entitled to all the books and records of the company. His assertion that what he took was "his share" is a question to be decided by the curt in terms of your right to vote on compensation for each partner and the right to share profits. the court could compel him to disgorge the money he took improperly and perhaps impose punitive damages if his actions were so egregious to warrant the ire of a judge. However, what evidence do you have to file the complaint and how much money is at stake? In other words, if he stole $10,000 in your eyes then you will spend more than this in litigation trying to recover your share. The court will not automatically award attorney fees so assume you could spend $30K to get back $10K....this happens so do not consider the court a place for justice where a point of principle is will be saddened after launching the cannon. I suggest you take the threat of a lawsuit (as described) as a way to force him to the table to arrive at an equitable settlement. All depends on the dollars at stake.

This is not intended to be giving legal advice and this topic can be a complex area where the advice of an attorney should be obtained.

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