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Thread: Exiting as member of CC

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    Exiting as member of CC

    Hi Everyone

    Desperate for advice please:-

    I purchased 50% interest in a friend's business (operational at the time for 20yrs+) some six years ago - no partnership agreement in place as we were friends for more than 20 yrs at the time and that didn't even cross my mind (stupid!). She is extremely well-known, popular in the industry and can sell ice to an eskimo… a real 'upstanding citizen' and with friends in all the right places.

    It was a good business, but its going downhill fast - profits on paper mean nothing if you're not collecting payment for services.... her previous partner (her mom) had re-aged debt so the entire debtors book seemed nice & clean & current BUT... its NOT and she continuously extends credit to her clients without discussing it with me or getting proper credit facilities in place so we have zero recourse for non-payment. I have also since established that a LOT of the invoices billed to her clients (and payment not collected) are actually mistakes that she made at immense cost for which her clients cannot actually be held liable.

    Our cashflow is a mess and I suspect that she has started trading in her own capacity on the side-line - hence no effort whatsoever with collecting overdue debt and extending more from the business where it suits her. Recently a client 'accidently' copied me on a proof of payment and included a company proforma invoice with bank detail edited to her own private bank account number and no record of the service being rendered through the business... she had some excuse and played it very innocently, but I don't a believe a word and the money is still not paid back to the business as she said she would.

    I want out before she completely bankrupts the business and leaves me with the hot potato, whilst working on her own exit strategy. The business does not have the cashflow to 'buy' me out for the amount I purchased it for (on a bank loan I am still repaying) and meet its financial obligations, nor does she have the money in her personal capacity (I don't think) - even if she did have, can I really insist on it?

    We are now in the silent treatment phase... I keep tackling the issues, but I get no response on anything written and verbally she just keeps promising that 'she is working on it' or tells me she can't talk right now. I have dragged her to a meeting with the auditor who 'repremanded' her and very little has come it.

    I don't want to involve her clients as I really don't even know what is legitimate debt anymore. We wrote off a ridiculous amount of money last year to try and clear things out and get ahead, but the same pattern is repeating itself.

    Basically I am happy for her to let her have her business back for the 50% its worth or at least what I paid for it. I just want to move on.

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    Forgot to mention its a CC.

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    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by Outplease View Post
    Basically I am happy for her to let her have her business back for the 50% its worth or at least what I paid for it.
    That's never going to happen because your "friend" is a criminal and you're trying to play nice and negotiate while she happily rips you off.

    Step 1 - Check with the CIPC whether you are actually registered as a member of the CC. If you aren't, cut your losses and walk away (you can't be held liable for anything because there's nothing to prove that you were a member).

    Step 2 - If you are registered as a member of the CC, then the Companies Act compels you to do something about the gross negligence and fraud that you know is being perpetuated. If you don't act, you can be held liable. Contact a good commercial attorney ASAP.

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

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    Thanks Greig.

    I am registered as a member of the CC and you have confirmed what I suspected.

    Have started putting out my feelers for a local commercial attorney.

    What do you foresee their action to be in this case?

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    Full Member claassenattorney's Avatar
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    Hello Dear!
    The person is just ripping you off and you are feeling happy? Its sound really foolish friend! As you mentioned that you are a registered member of CC, you should immediately take actions against her as this is a fraud case. If you do not take any action, you will be liable for all the misfortunes. She is taking benefits and it is clear that she will leave you with no money. She has other plans. So, it is better to consult a commercial attorney as soon as possible who can help you in this case.

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    Thanks for your response.
    I am certainly not happy now, but would be happy to move on
    Will definitely pursue with an attorney, but eager to establish what course of action the attorney is likely to take so that I know what to prepare and take along for the meeting and also to prepare mentally... seems that from no angle this is going to have a pretty ending.

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    Full Member claassenattorney's Avatar
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    Hello,
    We appreciate that you will be happy in course of time. You are going through a tough situation that can be only solved with the right solution and suggestions from a professional attorney. However, as you are eager to know how the attorney can help, I think this cannot be discussed through words. You have to direct go for a face-to-face interview with the lawyer.

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    Thanks to everyone who responded with advice.
    I had a meeting with a commercial attorney. Now considering the options of either cutting my losses and forcing a buy-out (now that I have the joker-card in hand) or moving forward BUT with a proper partnership agreement set up in such a manner that the reckless trading is completely eradicated and my interests are protected (In which case I hope that the attorney will also be able to assist with some form of document listing "demands & deadlines" -to put it plainly- in terms of overaged debt collection if I decide to stick around. Will meet with him again next week.
    A tough decision when you're so emotionally and not only financially vested in a business - a good business (when well run) to remain committed to but also a big risk considering the history.
    Your thoughts?

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    Full Member claassenattorney's Avatar
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    Oh! Great, you have taken help from the commercial attorney and now you will be shown the right path. From now, you will really be happy when you will be out of all liabilities and debts. It is quite true to move away from something which is emotionally attached with you, but in this, thinking in a practical manner is the best choice you have to take.

  10. #10
    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by Outplease View Post
    A tough decision when you're so emotionally and not only financially vested in a business - a good business (when well run) to remain committed to but also a big risk considering the history.
    Your thoughts?
    Get out as quickly and inexpensively as possible. If you can salvage any of your original investment, consider that a bonus. I can't even begin to fathom why you would want to consider remaining in partnership with a known criminal. There are plenty of good businesses that are already being well run - rather invest in those.

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

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