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Subject:
buying out a partner
Category: Business and Money > Accounting Asked by: becksg-ga List Price: $25.00 |
Posted:
02 Sep 2005 08:41 PDT
Expires: 02 Oct 2005 08:41 PDT Question ID: 563519 |
im buying my partner out (his 50%) at this point there is a loan from him personally to the company which if i didnt buy him out,we are responsible to pay it back on a 50/50 basis. the question is once i buy him out, is it just to ask him to still be responsible for his 50% debt? and to deduct this from the purchase price? thank you |
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There is no answer at this time. |
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Subject:
Re: buying out a partner
From: myoarin-ga on 02 Sep 2005 10:25 PDT |
Hey, if you buy out his share in the partnership/company (? LLC?), you still owe him repayment of his loan, 100%. It wasn't "we are responsible to pay back ...". The partnership/company is/was a separate legal entity and responsible to repay his loan. Check your partnership or company bylaws and the Uniform Commercial Code. I hope you asked here before speaking to him. |
Subject:
Re: buying out a partner
From: becksg-ga on 02 Sep 2005 11:24 PDT |
i didnt speak to him yet. when we negotiated the buy out there was his loan and also another bank loan for which he agreed to be responsible to 50% so my thought was/is- whats the difference between the bank and him? |
Subject:
Re: buying out a partner
From: myoarin-ga on 03 Sep 2005 04:33 PDT |
Concerning the bank's loan, I can only speculate that each of you may be individually obligated to the bank - either as fully liable partners in a partnership; or - in the case of an LLC - because the bank insisted that you each co-sign for the loan to the company. IN the case of your partner's loan to the "company", if he accepts continued responsibility for 50% of the repayment, he is effectively allowing you to reduce by that amount whatever you will be paying him for his interest. It has been a while since I read the Cal. Uniform Commercial Code ("Uniform" because states have adapted the language of state law to make their Commercial Codes "uniform"). I know that small partnerships and LLC sometimes incorrectly account for partner/owner loans in their books, hence my recommendation that you refer to the code. Please note that I am not a lawyer or accountant and that this is not legal or professional advice, as the Disclaimer below emphasizes. I hope that someone closer to the subject will comment or answer - especially if I have misinterpreted the matter. Myoarin |
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