me and my friend partnered in a start-up for a b-2-b website (something like alibaba.com) in august 2010. we had 50-50 partnership in x thecnologies llc.
in md usa. the deal was me working 60-70 hours a week at a pizza shop while he handles the hiring ppl for making the software till we launch the website(x.com)
it did go on for about a year me financing the company(in cash ) he searches, hires, manages people for the website programming.
After a year, couple months before we launch the site, we had an argument and he took all the data and moved to CA. he started a new company and launched the site, i had to stay in md and deal with the all the debt left (mostly in cash) in MD.
Over the time, althought i didnt have the money to hire an attorney i tried to reason with him about the dept and my share of the partnership on the new company.He asked me to hold on till he finds an investor(saying it will make impossible to find investment for a start up if it has legal issues on it)
As of today he turned the web site, a paid membership site and went overseas to make deals with chamber of commerce agencies which will require to build new companies over the country he makes the deal.
my question, is having only a 50% partnership on X thecnologies llc (whic he said applied to close the company with the accountant without my signature or approval) and having no idea on how much the website makes right now or values (according to website value sites on net more than $800.000) what can i do to secure my investment on such a complicated situation without hurting it.
Thank you for your time and help,
2 Answers from Attorneys
1. You ought to act quickly on this. It may now be more a matter of protecting yourself before it's too late, rather than worrying about hurting the business. Furthermore, it seems to me that you should be able to find a way to protect yourself without scaring away a potential investor.
2. If your friend or the business is now in California, you should ask LawGuru to post your question to attorneys in the county, in California, in which your friend or the business is now located. Especially given that time may now be of the essence, you want to be sure that you proceed in a jurisdiction where you can give notice, and bind your friend or the business, ASAP. The California attorney should be able to make whatever UCC or corporate filings are appropriate in Maryland for that purpose. One possible exception, to the above provisions of this paragraph, is if your LLC agreement stipulates Maryland or another jurisdiction for litigation or if Maryland or another jurisdiction is otherwise relevant and timely; in that regard, the California attorney should be able to address (a) whether a judgment obtained under such a clause, or under any other jurisdictional ground, would be enforceable against your friend's assets, or the business, in California; (b) the associated risks and expenses of your having to travel to California to litigate, as opposed to litigating in Maryland or such other jurisdiction; and (c) the quickest way of protecting yourself.
3. As to the merits, see the recent article, referred to in my blog, www.cybersecuritylawyer.com , regarding a recent court decision as to the attempts, by one member of a LLC, to take advantage, personally, of property and opportunities that belong to the LLC. You should also discuss, with the California attorney, among other things, whether you own the domain name or any applicable patents or copyrights. That may affect where to make UCC or corporate filings, as well as where to file any litigation.
The foregoing is just a quick response to the limited facts you have presented; you should explore this situation fully, including with all of the relevant documents and information, with a qualified attorney, quickly.
Sorry. The correct reference is CybersecurityLawyerBlog.com .