Full question:
I am partners with another person in a corporation. I am the President. My partner wants to purchase another truck and expand the business and I do not wish to because we are losing money. I was told that all I had to do was to write a Letter of Resignation and that would make it to where I am no longer liable for any debts that the business may come into. My partner is going to change the loan for the equipment into his name only. Is this correct?
- Category: Corporations
- Date:
- State: National
Answer:
Business owners often prepare for situations like this by creating a "buy-sell" agreement. This agreement outlines the terms for a partner's buyout, including the purchase price and payment terms. If no such agreement exists, the partners must negotiate the buyout terms, focusing on the value of the departing owner's interest and how the remaining owner will purchase it. This can be done through a cross purchase or a company redemption, depending on various factors like tax implications and security for payments.
Regarding the loan, whether your partner can assume it depends on if the loan is in the corporation's name and the lender's policies. If the loan is in individual names, the lender must approve the transfer of liability.
It is advisable to consult a local attorney to review your specific situation and documents.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.