Bad Business Partnership/Relationship
My question involves business law in the state of: california/nevada.
I have a family member who is dealing with some very complex/messy business matters it seems... and am seeking some advice/assistance on his matter...
He will be known as 'nephew'
'nephew' started an LLC chartered in Nevada but registered to do business in California where the business is currently operating out of as of last year. It is his first attempt to start a business.
he has a friend with whom he started the business with at the time and this person will be known as 'X'
X was also nephews employer at the time until the llc was formed and they started working together.
Nephew wants to disassociate himself with X completely beginning the new year in 2010, in all business & personal matters due to differences they don't see eye to eye on regarding business ethics, morals, values, and principles.
When the business was formed, X did not want his name on any of the business documents and gave 100% interest of the llc to nephew due to pending legal matters X was involved in. (another bad business deal that was going through litigation that he lost with his former business partner in another matter.)
nephew and X were working together but X is not officially on any of the business agreements/contracts. X is just a point of contact on business related matters.
'nephew' has everything in his name from the business/bank accounts, business contracts, articles of Organization, 100% of the LLC interest, and is the sole member/manager of the llc.
X has nothing in his name to the llc, however he was handling some of the business matters, funding, and accounting/books.
The business however changed its office location 6 months ago to X's office where the lease is in X's name.
X was also writing and signing checks under nephew's name for business related matters even when he is not authorized on the accounts.
As of the new year nephew has decided to stop all business and relations with X and went to the bank first to stop all future business transactions done on the account without his permission since its his name on the business/bank accounts.
Nephew is also receiving threats from X that he will call the police for grand theft for freezing the bank account and restricting unauthorized access to X.
Legally what rights and risks does the nephew and X have?
This is obviously very messy but what routes and options can the nephew pursue and what is the best way to handle this.
Should nephew dissolve the corporation and contact a CPA?
X has access to all the books and company records at his office which nephew is no longer allowed in.
What options should nephew pursue to get access of the records and books, when X refuses to cooperate?
How can the nephew stop X from all associations with the business?
Does nephew have to file a lawsuit to get X to stop and leave quietly? (which X will not do...)
Any help pertaining this would greatly be appreciated!
Thanks...
Re: Bad Business Partnership/Relationship
Unfortunately, I suspect that we lack the information necessary to give you any sort of definitive answer. Your nephew is able to control his own business, decide who works for his business, and decide who can access his business accounts; but it seems like there's more going on here. Your nephew should consult a business lawyer.