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Thread: Reckless Business Partner

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    Reckless Business Partner

    Hi, I wonder if anyone can help with some advice please? I have a small business (Under R2m turnover per annum) which is a Closed Corporation. I have 30% membership and the other partner has 70%. We have both signed sureties for 2 company vehicles and R100K overdraft. My partner uses the business accounts for personal use and now the business is technically R24K insolvent. I cant get him to attend meetings to address the financial issues and try rescue the business. He owns nothing and this business is his only source of income. I however have property and assets from other income and from before this company was started. Should we be held liable for all this debt, I am the only one with assets that they can attach. How can I rectify this situation or try minimize my liability? I have a number of solutions that could possibly rescue the business, if we act fast but I cant get him to attend a meeting (e.g. selling one company vehicle to at least pay back the overdraft). I am not sure if I represent a quorum when there are only 2 members - to create a paper trail in order to prove recklessness on his part. Please help! I did seek out legal advise but was quoted R4000 per hour which I cant afford at this stage.

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    I went thro this about 20 years ago. Short answer is yes if you have signed personal surety - you don't even have to be a member of that business. If you signed personal surety they will come after you.

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    Not sure if this is possible or would help you. Maybe get the banks to remove his authority to conduct any further transactions?

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    30/70 means you are sunk, I'm afraid.

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    Quote Originally Posted by Tiger1977 View Post
    How can I rectify this situation or try minimize my liability?
    Do you have a Members Association Agreement? If so, what does it say about member responsibilities, voting rights, etc.?

    Quote Originally Posted by HR Solutions View Post
    If you signed personal surety they will come after you.
    Not necessarily. Amongst other mitigating circumstances, it would depend on whether OP is married in community of property or not.

    Founder of Growth Surge - Helping entrepreneurs create more wealth and enjoy more freedom.

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    Quote Originally Posted by Greig Whitton View Post
    Do you have a Members Association Agreement? If so, what does it say about member responsibilities, voting rights, etc.?



    Not necessarily. Amongst other mitigating circumstances, it would depend on whether OP is married in community of property or not.

    He signed surety !!! Got nothing to do with how he is married - he is liable !
    Face reality here - I have been thro this !!!!

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    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by HR Solutions View Post
    He signed surety !!! Got nothing to do with how he is married - he is liable !
    Clearly you aren't familiar with the Matrimonial Property Act. As per usual, you spout nonsense without checking the facts.

    Founder of Growth Surge - Helping entrepreneurs create more wealth and enjoy more freedom.

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    Fully aware of it - seems u are once again giving bad advice and stuffing up another thread !!

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    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by HR Solutions View Post
    Fully aware of it - seems u are once again giving bad advice and stuffing up another thread !!
    If you're aware of it then you would know that a personal suretyship may not be valid if the surety is married in community of property.

    Founder of Growth Surge - Helping entrepreneurs create more wealth and enjoy more freedom.

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    Quote Originally Posted by Greig Whitton View Post
    If you're aware of it then you would know that a personal suretyship may not be valid if the surety is married in community of property.
    A personal surety is always valid however you are married. The Bank would go after the person that signed the surety (as I originally said) but would only be able to get according to how the person was married. Marriage does not stop you signing personal surety and neither does it stop the Bank or whoever might be trying to recover their money. They will come after what is legally theres according to the surety.

    As I said I have been thro this about 20-25 years ago. I also signed surety (stupidly) I know exactly about the matrimonial property act. (Oh and by the way I have been married 31 years)(And I also have a pty ltd and have to face the fact that some suppliers require personal surety)

    So as I have said before ..... how you might interpret some small print you may find is sometimes different to how it plays out in real life.

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