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How do I get out of a business? I want my partner to buy my half of our store.

Reading, PA |

I'm half owner of a deli. I just got a job offer out of town and would like to leave the deli to take the job. My partner first said he'd buy me out, but now he's dragging his feet because I think he doesn't want to pay me. Some of the business's bills are in the name of our corporation but a couple are in my name because I could get credit easier than him. So I really need him to take over because he's running the place and not even paying all the bills on time, and I'm getting late notices. Can I make him buy me out? We don't have any agreements that say what happens if we break up so I don't know what to do. I mean, can I sue him to make him pay me or what? Can I make him pay the vendor bills? I'm not even working at the store anymore, but I feel like I'm stuck.

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Attorney answers 3

Best Answer
Posted

I must preface my remarks by saying that you will need to engage a corporate attorney to review the documents involved and also the entire situation. If you do not have any agreement about how to break up the corporation, the Pennsylvania Business Corporation Law applies. There is no provision in the BCL which deals with a shareholder simply wanting out - so the other owner has no obligation to buy you out. This would have to be negotiated. The closest law that applies are the provisions of the BCL governing involuntary dissolution of the corporation. A Court (briefly stated) would entertain an involuntary dissolution of the corporation if (1) the acts of the person in charge are illegal, oppressive or fraudulent; (2) the corporate assets are being wasted; or (3) the directors of the corporation are deadlocked and business cannot be carried on. It does not seem to me that you fit into any of these scenarios, but I would need much more information from you about this. Concerning the loans you made to the corporation, as long as the fact that the monies given are documented as being loans and that there is documentation showing how the monies went from you to the corporation, you may be able to bring a lawsuit against the corporation to collect. This is simply not the correct forum to respond to your questions - and you should engage a local corporate attorney to advise you.

Asker

Posted

Thank you for your answer. I don't think he's running the business right, there are some things he's doing, so that's something we may be able to go to court with.

Posted

I can see why you feel stuck. You need to have a straight conversation with your business partner and tell him to buy you out and get it in writing. I would include getting those loans out of your name. You mention a corporation so it sounds like there is some business structure to work with. All of the issues you have raised are not really answerable in this type of forum, but you can get out it just may cost you some money. I would suggest you use the find a lawyer tab above to locate an attorney in your area. There are several attorneys who offer free initial consultations who will explain your legal rights. Good Luck.

Nothing herein is intended to create an attorney client relationship and the response is intended to provide generally a broad response to the area posed by the question. Each question is governed by unique facts and no answer provided is intended to specifically answer the question, but is a general overview of the area of law contained in the question.

Posted

You're going to need to sit down with an attorney to go over all of the details. You say that there's a corporation, but you also talk about "partners," creating some ambiguity as to exactly what kind of entity we're talking about. It could even be a hybrid entity like an LLC. Whether or not you can force your co-owner to buy you out is going to depend strongly on how the business is actually structured.

You may even have other options, such as selling your share to an interested third party. All depends on how the thing is set up.

This answer does not constitute legal advice and does not establish an attorney-client relationship.

Asker

Posted

Thank you. It's a corporation. I just have a partner in it, didn't know what else to call him.

Ryan Michael Davidson

Ryan Michael Davidson

Posted

That would clear things up, but it makes the corporate documents very, very important. As Ms. Schulz has indicated, unless there's something specifically pertaining to your situation in the articles of incorporation or bylaws, the general corporation statute will control, and that does not have any provision for making someone buy you out. It also makes sitting down with an attorney that much more important. Partnerships can be formed and dissolved relatively informally, but corporations are creatures of statute, and you can't just do stuff because it's convenient. The forms must be obeyed.

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