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Can my restaurant business partner run away to another state?

New York, NY |

My partner and I have a corporation (restaurant), 50% each, no business contract, we created debt and trying to pay them off, now our lease coming to an end, we are trying to renew it, but my partner decided to move to another state and do some business there, first he ask me to continue paying his salary when he is gone, witch I refuse because he is not working anymore. To me he is running away from his responsibilities with the debt? Can he go away like that and I have to take care of the rest, and pay someone else to do his job (cooking). And can he go to the bank and withdrawal money for himself anytime? Money that the business need to pay bills?

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Attorney answers 4


Yes, he can move to another state.

The corporation has dept, and unless guaranteed by the shareholders (or others) does not impose personal liability to stay on a sinking ship. He may not however, perform any fraudulent transfers or take excess distributions. It may take a lawsuit, however, to demonstrate that and get a court judgment.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.


I agree with Mr. Doland. He is not obligated to go down with the ship but he cannot suck all the good money out of the business either especially if you have debts that need to be serviced.

We have seen many of these kind of issues come up in our NY practice. I suggest you discuss your situation over with a lawyer in private so all the facts and circumstances and be explored and a best course of action can be reached.

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.


I agree with the other attorneys' answers.
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Let me add that you should be careful with the term "salary". Partners or shareholders do not have a salary, generally, unless they are also employed by the corporation in a separate capacity. Instead, they receive dividends, or enjoy the growth of the value their ownership has. If the business is under water and in danger of closing, then all funds must, by law, be directed towards either paying those debts off, or attempting to resuscitated the business. By no means should you stand by idly while he raids the cookie jar.

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