What is my legal responsibility for debts incurred by a business I own with a partner if I want to leave the business?

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What is my legal responsibility for debts incurred by a business I own with a partner if I want to leave the business?

I started an LLC with a partner 2 years ago. He personally loaned the company $96,000 to start and we wrote promissory notes for repayment. We agreed to a 30% (me) and 70% (him) split of ownership. We also agreed on $48,000 annual salary (me) and $60,000 annual salary (him). With accrued interest, the loans presently have a balance of $76,000. We are currently losing money, and we have not paid ourselves in months. The loans are the main debt we have. I want to know how much of the remaining $76,000 I would legally owe my partner if I leave the company?

Asked on November 9, 2011 under Business Law, North Carolina

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The best way to answer your question is to read the operating agreement concerning the limited liability company you have an interest in and your capital contribution and how any withdrawing member is to be compensated regarding the return of capital in that the document will control your situation.

From what you have written, you would not owe your partner any money, the limited liability company (an entity) would be obligated for the personal loans to it. I would consult with a business attorney further regarding your question. Good luck.


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