at the beginning of the year i entered into an LLC partnership with another married couple. Due to the fact that we (me and my husband) did not have start up money to invest in the company both parties decided to fund the LLC with personal contributions as needed.
We decided to enter into a 50/50 partnership funding the company equally as we went along. We were to handle the creative and manufacturing aspects while they managed shipping, paperwork and book keeping.
Both parties had occurred small out of pocket business expenses (business cards, shelving, etc) by the time we had decided to make our first production run. We decided to split the production run 50/50. They paid for the first production run with a personal check and we then sent a personal check to cover our half of the first production run as well as an additional $1200.00 to open a company bank account.
Now, 3 months we requested a review of the numbers. To begin with we found out that a bank account was never opened. We were presented with a spreadsheet that presented the company as having a $-60.00 balance. This spreadsheet was a complete and total shock. First of all it showed that the company had already received payments which was news to my husband and I. It was also presented by the other party that their contribution was significantly larger than ours. The problem was that this spreadsheet made no distinction between whether or not the other parties expenses were paid out of pocket or with company funds. Keep in mind these are the people who are responsible for the book keeping, that is the expertise they said they could bring to the table.
After taking a look at the numbers and preparing a proper spreadsheet taking into account the in and outgoing payments of each entity separately (us, them, company). It became clear that that there expenses were 10,000 but they had used company funds to pay most of them and had technically reimbursed themselves as they were using their own bank account as a company account. The difference between what the company had made and what they had spent was $5000.00, meaning the company should have a positive balance of $5000.00. Meanwhile none of our expenses were reimbursed and even though company money was coming in we were told that it was not and that we had to continue to make personal contributions. This left us out of pocket $-6700.00.
They said they would take a closer look at the books and balance everything. Two weks went by with no action.
My husband and I have told them that we want to dissolve the partnership under the following terms...
*they cut us a check for 1/2 of our current out of pocket expense
*we want to pay for the last production run we need to complete outstanding orders with the $5000.00 company balance
*we split what remains in the company account equally
*we split the profits from the orders that are currently on record 50/50 when payments come in over the next 2 months
We are 3 weeks behind on this production run and the other party refuses to respond to us or to cut the check to pay for the remaining production run.
Aside form get a lawyer, any thoughts or advise?