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Thread: CC Members no longer getting along

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    Bronze Member Beancounter's Avatar
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    CC Members no longer getting along

    I have perused the CC Act but failed to find a solution to what happens when the members of a CC no longer get along and one wants out. The CC is basically insolvent so from the CC no distributions can be made to any members without contravening the Act.

    The member who wants to leave however insists on R50 000 buy-out so that he can get out of the CC but the other members cannot afford to pay him. Can the remaining members offer any reason why he should sign the CK2 without paying him anything?

    Is this one of those cases where the members are going to have to approach the Master of the High Court for a decision on the matter or does the Act provide for instances like this?

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    Diamond Member Justloadit's Avatar
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    Is the company worth R50K? Probably not, so why do you have to pay him to get out.
    Liquidate, and no one gets anything.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar pumping, Solar Geyser & Solar Security lighting solutions - www.microsolve.co.za

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Justloadit View Post
    Is the company worth R50K? Probably not, so why do you have to pay him to get out.
    Liquidate, and no one gets anything.
    +1

    Normally a good starting point in negotiations

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    Bronze Member Beancounter's Avatar
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    Good idea Justloadit, only problem is, the remaining members are father and son and the dad stands to lose his house if the son doesn't carry on with the CC and try and make a success of it to repay his dad's loan.

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    Are the only 2 members the dad & son. Also was any membership agreement signed between the members?

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    Bronze Member Beancounter's Avatar
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    They are 3 members, father and 2 sons. One son wants out, the other son wants to carry on and try and save the business to repay the dad's loan.

    No membership agreement as far as I'm aware of, so we have to rely on the Act.

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    Site Caretaker Dave A's Avatar
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    Lovely - all in the family to boot

    I take it you're trying to avoid holding a meeting and achieving what you want in a strategic sequence of resolutions. 2 out of three members does make a voting majority.

    EDIT: I just took a quick poll in my office - everyone reckons the one who wants to bail should be paying in to get out!

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    Bronze Member Beancounter's Avatar
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    Lightbulb

    Hehe! I like the way the people in your office think!

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    2 things i have learnt from bussiness in the couple of years i have been operating...dont let family get involved in your bussiness especially not your wife(personal experience)...and even kids if you can help it...and the other dont get involved with partners...the last partnership i have been watching finally broke down after 27 years and now there iis just bad feeling amongst all the members...as soon as the sons got involved so the relationship between the partners started to fall apart...now the sons are busy destroying whats left of the comapnies faster than they can make money.

    this is just form my experiences and what i have seen in the couple of years i have been in bussiness...father work hard to make their companies grow...drive the same car for years...save...save ...save ...save...save...save...as soon as the wife or kids get their hands on the comapny or money they spend it faster than the interest can be earned on the savings or the company can turnover...it is just so sad...

    one company i worked with...the father didnt even own a motor vehicle...yet he was (being the key word) doing so well...had enough money to build his family houses worth millions and paid cash...while building one of the houses i noticed the son driving the latest top of the range car...within a couple of years the company went backrupt...it just could nt keep up with the lifestyles...he lost everything he spent his life building.

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    Site Caretaker Dave A's Avatar
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    Been thinking about this one. Taking it to The Master to resolve might produce an unintended result (order to liquidate).

    The current scrap seems to be a dilemma in two parts, really.

    Is everyone agreed that the one member should leave?

    If yes, all that is left is to agree the payout (or pay-in )

    If the members could be pursuaded to accept an independant valuation as a reasonable solution to determining a fair value for the interest, you might just pull this one through without a lingering family fued...

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