We have a really long drawn out scenario on the go regarding our young business, how it was run and how it began to go pear shaped. We are at the point now where we are trying to extricate ourselves from this scenario so that we can move on, resume receiving an income and get out of debt. In order to avoid a long winded post, I'm going for the nutshell approach
We had a new business idea and approached "Bob" for an investment into it.
PTY registered July last year, Bob has 52% of shares "to safeguard his capital investment", myself and partner 24% each. Bob also wanted to manage the finances of the business, again to protect his investment. We were okay with this feeling that he brought financial planning and experience that we didn't have and thus this would be his role in the biz. Us remaining 2 partners are everything to the business, it would not run without the 2 of us. We are the only "employees" and do the full 100% of the work necessary in running the company.
Things went very downhill from there in terms of mismanagement of loan accounts and his general lack of time for the biz resulting in supplier payments being missed etc.
We all agreed to close the business at the end of its financial year (end Feb 2013) and go our separate ways, but are now back and forth trying to resolve money and time invested. Bob feels that, as his loan acc has the highest monetary value that he MUST be repaid. Which is impossible given the business's (online shop) only asset is the stock it has on hand which does not equal that amount. As we were not unable to dump a large sum into the company, our loan account has been made up with purchases along the way such as laptops and other office equipment necessary for the business to run, office cell phone contact, internet provider contract etc. We have drawn as meager a salary as possible to aid the company, much to the detriment of ourselves in terms of personal debt occurred.
Bob has now "offered" that either (1) I take the store as it stands, including all its debt and repay him. (2) He takes the store as is, employs new staff and carries on with the store and all its debt (no mention of repayment of our loan accounts) or (3) we close the store, close the pty and a payment plan is instituted with all 3 of responsible for one third of the total debt.
Now, we have 0 paperwork. No memo and articles, no shareholders agreements, no management agreements, nadda. All we have is our CIPC doc showing registration and share %s and verbal agreements that Bob has gone back on numerous times.
I refuse to institute any payment plans as we have all plowed money and time into the biz which has failed for a variety of reasons. There is no pool of money for us all to be repaid from and toddle off into the sunset with. Is it not a given that money was invested into a legal entity which failed and therefore the only "person" legally required to pay anything back is the bust company? The company was given capital, it was unable to float itself or repay that capital and has gone bust. Therefore we have all lost money and effort in a venture which failed.
Given the complete lack of agreements to refer to in terms of behaviour at this junction, what is suggested at this point? Is there anything to say that the other directors are liable to repay investment by one other director?
I am happy to close the site as it is (will redirect to my other shops) and we all walk away having lost time and money. I just want to know that legally there is nothing he can come after us with.
In terms of the site - part of his initial investment was spent on paying for a site to be built. We were left hanging by a bum web design company leading to me spending hours on google and youtube teaching myself web design and html etc to finalise the site and open for business. What we have now is nothing like the basic framework we were provided with that the company (via Bob loan account) paid for. This site is therefore my intellectual property?
All thoughts and opinions greatly appreciated!