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  1. #1
    Join Date
    Aug 2013
    Posts
    4

    Default Transferring Ownership of My 50/50 Partnership LLC to the Other Owner

    My question involves business law in the state of: Oregon

    Hello,

    I've been running a 50/50 partnership LLC (coffee shop) with my brother as the partner. I don't see feasibility in the spot we're in, so I'm basically done. Our lease ends in September, and my brother wants to continue operations. He wants full ownership as well. I agreed, because I want to transfer my 50% to him.

    Here's the hard part... No business plan was ever made up, nor any agreements for the given case that we perform this. The only agreement we do have, however, is towards our debt (our father's the bank lender). If we are unable to break-even after a year, we each pay 50% towards the monthly loan payments. We have not done so (break-even nor make personal payments) and instead have been using the company to pay off the accrued debt with monthly payments of 260.

    I don't know exactly how much debt we have, I'd say around 13,000. We ran at a loss in our first year (started up April of 2012). We do have assets since we are a coffee shop, though.

    I'm looking for the best advice to transferring ownership to him. I don't know the exact details of how to go about this legally and fiscally. He made an offer of retaining half of the debt within the company, along with WANTING COMPENSATION of 2,000 (payments or working there as sweat equity). This offer made completely no sense to me, since I'm the person essentially getting bought out. I don't feel that he wants to accept the full debt of the company, but as a 100% owner, that responsibility is his to my understanding.

    Ultimately here's what I want:

    No stake whatsoever in the business at the end of September
    Payment agreement with regards to buying bought out
    No accumulated debt

    Is this doable? For him to take ownership, does he have to buy out my half of assets?

    Thanks for your help.

  2. #2
    Join Date
    Oct 2006
    Posts
    15,280

    Default Re: Transferring Ownership of My 50/50 Partnership LLC (I'm Done)

    Quote Quoting Krol2005
    View Post
    My question involves business law in the state of: Oregon

    Hello,

    I've been running a 50/50 partnership LLC (coffee shop) with my brother as the partner. I don't see feasibility in the spot we're in, so I'm basically done. Our lease ends in September, and my brother wants to continue operations. He wants full ownership as well. I agreed, because I want to transfer my 50% to him.

    Here's the hard part... No business plan was ever made up, nor any agreements for the given case that we perform this. The only agreement we do have, however, is towards our debt (our father's the bank lender). If we are unable to break-even after a year, we each pay 50% towards the monthly loan payments. We have not done so (break-even nor make personal payments) and instead have been using the company to pay off the accrued debt with monthly payments of 260.

    I don't know exactly how much debt we have, I'd say around 13,000. We ran at a loss in our first year (started up April of 2012). We do have assets since we are a coffee shop, though.

    I'm looking for the best advice to transferring ownership to him. I don't know the exact details of how to go about this legally and fiscally. He made an offer of retaining half of the debt within the company, along with WANTING COMPENSATION of 2,000 (payments or working there as sweat equity). This offer made completely no sense to me, since I'm the person essentially getting bought out. I don't feel that he wants to accept the full debt of the company, but as a 100% owner, that responsibility is his to my understanding.

    Ultimately here's what I want:

    No stake whatsoever in the business at the end of September
    Payment agreement with regards to buying bought out
    No accumulated debt

    Is this doable? For him to take ownership, does he have to buy out my half of assets?

    Thanks for your help.
    The first thing that you have to do is figure out whether or not the shop has any equity.

  3. #3
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: Transferring Ownership of My 50/50 Partnership LLC (I'm Done)

    You can negotiate whatever terms you wish. If I am understanding you correctly, you are personally liable for the debt of the LLC? That is something from which your brother might be reluctant to relieve you. If the business has value then it might be worth his while to do so, but if the two of you agreed to share the risks going in, why should he assume all the risk at this point? If your share of the business does not have net value then he would not be "buying you out" because you have nothing to sell to him.

  4. #4
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Transferring Ownership of My 50/50 Partnership LLC to the Other Owner

    It appears he might be coming up with the $2000 figure as your portion of the loss upon transfer. If you take $13k in debt, subtract all the assets owned by the business, what is left? Remember there are going to be taxes to factor into all this.

  5. #5
    Join Date
    Aug 2013
    Posts
    4

    Default Re: Transferring Ownership of My 50/50 Partnership LLC to the Other Owner

    Thanks for the responses.

    Our total assets are 4115
    Our total current liabilities (from quickbooks) is : 16800. This is debt accrued.

    llworking, personal equity is 1100 me, 1500 him. Total equity is -12700 (due to draws and retained earnings).

    I'm trying to figure out the best approach to breaking this. I mean it seems like my best route would be to following the original loan agreement, which is covering the 50% of my obligation towards the loan. Then I'd be paying for my responsibility of the debt.

    Other options? Thanks for the help guys.

  6. #6
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: Transferring Ownership of My 50/50 Partnership LLC to the Other Owner

    Seems to me that in order to walk away you owe your brother $6,350 to meet the obligation you signed up for. By not walking away, that number could rise. By walking away it can go neither up nor down. That's the call you have to make, I think.

  7. #7
    Join Date
    Aug 2013
    Posts
    4

    Default Re: Transferring Ownership of My 50/50 Partnership LLC to the Other Owner

    Is demanding my 1,100 in equity a route? By law am I entitled to receiving it?

  8. #8
    Join Date
    Jan 2006
    Posts
    38,534

    Default Re: Transferring Ownership of My 50/50 Partnership LLC to the Other Owner

    Quote Quoting Krol2005
    View Post
    Is demanding my 1,100 in equity a route? By law am I entitled to receiving it?
    where do you see you having $1100 in equity? The business is $13k in the hole so the value of your share of the business is worth less than nothing at the moment.

  9. #9
    Join Date
    Apr 2009
    Location
    Inland Empire
    Posts
    1,410

    Default Re: Transferring Ownership of My 50/50 Partnership LLC to the Other Owner

    Quote Quoting Krol2005
    View Post
    Is demanding my 1,100 in equity a route? By law am I entitled to receiving it?
    You have no equity in the business.

  10. #10
    Join Date
    Aug 2013
    Posts
    4

    Default Re: Transferring Ownership of My 50/50 Partnership LLC to the Other Owner

    Just curious, through personal investments to the business. This is what I figured.

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