Business Partner Financial Dispute

Summary

In Alberta, business partners owe fiduciary duties to each other, and misuse of funds can lead to civil liability, not necessarily criminal charges. If mutual consent for fund usage can be demonstrated, the risk of imprisonment is reduced. Delays in raising complaints may suggest acceptance of fund usage. Legal counsel is crucial for navigating these issues, and free or low-cost legal resources are available in Alberta. Breach of fiduciary duty typically results in civil consequences, not criminal ones, unless fraud or theft is proven.

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Personal guarantee on a business loan and business partners emptied business account and started new business of same kind leaving the other partner out to dry. He was using too much of funds of business for personal pressing needs so they did this. Now he has nothing. So two personal guarantee loans and the business partner with nothing is scared that if he gets a job it won't matter because they will come after him and take all his pay and make him homeless. Is that legal or a concern he should have?
Hi ****, I'm sorry to hear about your situation.
- The legality of your partners' actions could depend on the specific terms of your partnership agreement and local laws regarding fiduciary duties.
- Personal guarantees can make you liable for business debts, leading to wage garnishment if you default.
What state are you located in? This will help provide more specific information.
Alberta
Hi ****, here are some key points regarding your situation in Alberta:
- Your partners may have breached their fiduciary duty if they misappropriated business funds.
- Personal guarantees can indeed lead to personal liability, including wage garnishment.
- Consult a lawyer to review your partnership agreement and explore legal options.
Would you like information on free legal resources or advice on finding a lawyer in Alberta?
No, could you tell me what wage garnishment means?
Wage garnishment is a legal process where a court orders an employer to withhold a portion of an individual's earnings for the payment of a debt. This can happen due to personal guarantee defaults, unpaid taxes, child support, or other debts.
Would you like more details on how wage garnishment works in Alberta?
But they can't hold the entire amount of the wage right? It would just be a reasonable portion allowing the person to still pay rent and buy food?
In Alberta, wage garnishment laws ensure that only a portion of your income can be withheld. The precise amount varies but generally allows the debtor to maintain a reasonable living standard. Typically, up to *% of your net earnings can be garnished, depending on the debt type.
Is there anything else you would like to know about wage garnishment or other legal matters?
Ok, but this person also has to help his family pay a mortgage because they used their home as collateral for one of the loans so how can he pay it if they are taking half of his rent. His whole family mother and father could lose their home.
****, wage garnishment laws in Alberta generally protect a portion of your income to ensure you can meet basic living expenses. However, the situation is more complex with personal guarantees and family obligations.
Key points to consider:
- Alberta's Civil Enforcement Act limits garnishment to a portion of your net earnings, generally up to *%.
- You may negotiate with creditors to reduce garnishment amounts, considering your financial obligations.
- Legal counsel can help explore options like debt restructuring or insolvency protection.
Would you like more information on finding legal aid in Alberta?
But in Canada lawyers are so expensive in his situation he could never afford it. How can Alberta protect him and enable him to cover the expenses and protect his mother's home?
****, your situation is indeed challenging. Here are some options in Alberta that might help:
- Legal Aid Alberta: They offer free or low-cost legal services to those who cannot afford a lawyer.
- Pro Bono Legal Services: Some lawyers offer free services for those in financial need.
- Debt Counseling Services: They can help negotiate with creditors and explore debt relief options.
Would you like more details on any of these resources?
Insolvency programs
****, here are some details about insolvency programs available in Alberta:
- Consumer Proposal: Allows you to negotiate a new payment plan with creditors, reducing the overall debt and avoiding bankruptcy.
- Bankruptcy: A legal process that can discharge many of your debts but may involve the liquidation of assets.
- Orderly Payment of Debts (OPD): A debt repayment program consolidating unsecured debts into one monthly payment, with interest rates reduced.
Would you like more information on any of these programs or assistance with the application process?
Would bankruptcy on the business affect the personal guarantee?
In Alberta, bankruptcy on the business ****sn't automatically release personal guarantees. Key considerations:
- Personal guarantees usually remain enforceable despite business bankruptcy.
- Creditors can pursue guarantors for repayment.
- Legal counsel can help negotiate with creditors or explore insolvency options for the guarantor.
Would you like more information on negotiating with creditors or other legal options?
So his biggest concern is that his business partners who are so angry with him would frame him in the worst light and present him in such a way to the auditors to try and say he was stealing from the business as he was using business funds for personal needs beyond what they felt was fair and so on. He's scared of prison or they completely ruining his life because that is their expressed intent.
****, it's crucial to address these concerns carefully:
- Misappropriation Accusations: If your partners accuse you of misusing funds, they must provide evidence. Legal representation is essential to defend against these claims.
- Criminal Charges: Misuse of business funds can lead to criminal charges if proven. Consulting a criminal defense lawyer is advisable.
Would you like to know how to find a criminal defense lawyer or more about your legal rights in this situation?
Please go into detail about misappropriating of funds...it was for a wife in need in Thailand and debts there.
Misappropriation of funds involves the unauthorized use of business assets for personal needs. In Alberta, this could have serious legal consequences, including:
- Fiduciary Duties: Business partners owe each other and the business fiduciary duties, which include acting in the best interest of the business.
- Civil Liability: Misappropriating funds can lead to civil lawsuits. Partners could sue for breach of fiduciary duty, demanding compensation for losses.
- Criminal Charges: If proven, misappropriation can lead to criminal charges like theft or fraud, resulting in fines or imprisonment.
Would you like more information on defending against misappropriation accusations or finding legal assistance in Alberta?
What is the likelyhood of imprisonment, it was all in the context of being overwhelmed in the business and hoping for increase every week and a couple milestones that were always around the corner of achieved but never were, but if they were achieved they would cause the earning of large amounts that he felt would cover those losses.
****, the likelihood of imprisonment depends on several factors:
- Evidence: Strong evidence of intentional misappropriation increases the risk.
- Amount Involved: Larger amounts misused can lead to more severe consequences.
- Intent: If it can be shown that there was no fraudulent intent, it may reduce criminal liabilities.
Would you like help finding a criminal defense lawyer in Alberta?
There was no structure of pay for the business funds and the agreement was use what you need and each had free reign to pay for personal stuff or whatever. And the business other partner got in a relationship with an employee and that's when they started doing all that they are doing to bring the other partner down. It was just a standardized agreement. But it was just a standardized agreement and they were */* partners is all. He thought it applies that you are *% responsible for *% of the money. They said that, the lawyers said, it ****sn't matter that he used more of the money whatsoever.
****, given the complexity of your situation, it's essential to seek legal advice. Here are some key points:
- Partnership Agreement: Review the agreement with a lawyer to understand your rights and obligations.
- Evidence: Gather all financial records to demonstrate that there was no misuse of funds.
- Legal Aid: Utilize resources like Legal Aid Alberta for affordable legal assistance.
Would you like more information on how to contact Legal Aid Alberta or other legal resources?
You are lawyer genie. Ask me questions so that you can give clarity about this situation.
****, I'm here to help. One more question to provide better clarity:
Have you documented any instances or evidence of the "standardized agreement" and mutual consent regarding the use of business funds for personal needs?
They dissolved the business (the other partners) but the partner never signed the disolution papers (the partner who lost everything)
****, here are some critical points regarding your situation:
- Dissolution Without Consent: If the business was dissolved without your partner's consent, it might be legally contested.
- Documentation: Gather all proof of the "standardized agreement" and mutual consent for using business funds.
- Legal Steps: Consult with a lawyer to explore your partner's rights regarding the dissolution and potential claims against the other partners.
Would you like more details on how to find a lawyer or resources to assist your partner in Alberta?
What the angry business partner said was "you took excess funds and now we can't pay our business bills and you took a shareholder loan that ruined the business as well"
****, it's crucial to address these accusations seriously:
- Evidence Collection: Gather all records showing the agreed use of business funds.
- Partnership Agreement: Review the terms and conditions with a lawyer.
- Legal Representation: Essential for defending against these claims and protecting your rights.
Would you like assistance in finding a lawyer or accessing legal resources in Alberta?
What are the reasons this individual who has nothing now ****sn't have to worry about imprisonment even with an audit...the other business partner has a drinking problem and went to rehab multiple times during their business operation
****, here are some reasons why imprisonment might be unlikely, even with an audit:
- Intent and Evidence: If there was mutual consent and no fraudulent intent, imprisonment is less likely.
- Rehabilitation Factor: The other partner's drinking problem may affect their credibility.
- Civil vs. Criminal: Many financial disputes are resolved in civil court, focusing on compensation rather than imprisonment.
Would you like more information on defending against these claims?
Yes into detail as the problem is the business partner who is down and out is living in immense fear because of the malintent of the other partner.
****, it’s important to take the following steps to protect your partner:
- Document Everything: Collect all financial records and evidence of mutual consent for using business funds.
- Legal Counsel: Consult with a lawyer to review the partnership agreement and explore defense strategies.
- Communication: Consider mediating a discussion with the other partners to potentially resolve the dispute without litigation.
Would you like more detailed guidance on finding legal assistance in Alberta or understanding the legal processes involved?
So give some advice about this case. How is it looking for the down and out partner?
****, your partner's situation is complex and challenging, but there are steps to take to address the issues:
- Documentation: Collect all evidence of mutual agreements and financial transactions.
- Legal Counsel: Essential to review the partnership agreement and defend against accusations.
- Negotiation: Attempt to mediate with the other partners to resolve disputes amicably.
Would you like more detailed guidance on finding legal assistance in Alberta?
Is the down and out partner at risk. What is most likely to happen?
****, the down and out partner is at significant risk due to the personal guarantees and accusations. Here’s what might happen:
- Financial Liability: Personal guarantees can lead to wage garnishment.
- Legal Consequences: Potential civil lawsuits or criminal charges if misappropriation is proven.
- Defensive Actions: Immediate legal counsel is crucial to defend against these claims.
Would you like more detailed guidance on finding legal assistance in Alberta?
He can't afford a lawyer....how would the situation of the business partner getting in a relationship with an employee/contractor in the business but essentially functions as employee
****, here are some key points regarding the business partner's relationship with an employee in Alberta:
- Conflict of Interest: Personal relationships in the workplace can lead to conflicts of interest, affecting business decisions.
- Code of Conduct: Check if the business had any policies regarding personal relationships.
- Legal Implications: Depending on the circumstances, it may impact the dissolution process and any claims being made.
Would you like to explore how to address conflicts of interest and protect your partner’s rights?
Give an idea of most likely outcome
****, given the complexity and severity of the situation, here are some potential outcomes:
- Financial Liability: Likely wage garnishment due to personal guarantees.
- Civil Lawsuits: Potential for civil suits from partners for misappropriation of funds.
- Criminal Charges: Possible but less likely if intent and mutual consent can be proven.
- Negotiation: Successful mediation could reduce legal and financial consequences.
Would you like more detailed guidance on finding free or low-cost legal assistance in Alberta?
Criminal chargers such as intent being less likely...what ****s that mean?
In this context, "intent being less likely" means that the likelihood of criminal charges depends on whether there was an intention to commit fraud or theft. If your partner can provide evidence that the funds were used with mutual consent and there was no fraudulent intent, the chance of facing criminal charges is reduced.
Would you like more information on how to gather evidence and defend against potential criminal charges?
It's an articles of incorporation minute book that is purely standardized. They just bought the business and it was all already written out. Just a regular standardized contract for * partnership and corporate book. Nothing added.
****, the standardized articles of incorporation and */* partnership agreement are crucial documents. Here are some key points:
- Fiduciary Duties: Partners owe each other a duty to act in the business's best interest.
- Evidence: The standardized agreement can support your partner's defense.
- Legal Counsel: Essential to interpret the agreement and defend against claims.
Would you like more detailed guidance on finding free or low-cost legal assistance in Alberta?
So now that you know it's standardized. Analyze the case
****, based on the standardized nature of the partnership agreement and the complexity of the situation, your partner faces significant risks but also has potential defenses. Here are some key points:
- Financial Liability: Given the personal guarantees, wage garnishment is likely.
- Civil Lawsuits: There is a strong possibility of civil suits from partners for misappropriation of funds.
- Criminal Charges: Less likely if mutual consent and lack of fraudulent intent can be proven.
- Legal Defense: Essential to gather evidence and consult legal counsel.
Would you like more details on accessing free or low-cost legal resources in Alberta?
So what consequences for misappropriation of funds?
****, here are the potential consequences for misappropriation of funds in Alberta:
- Civil Liability: Your partner may be sued for breach of fiduciary duty and required to compensate for losses.
- Wage Garnishment: If found liable, wage garnishment could be enforced for debt repayment.
- Criminal Charges: If proven intentional, it could lead to criminal charges like theft or fraud, with potential fines or imprisonment.
Would you like more detailed guidance on finding legal assistance in Alberta?
What charges in worst case scenario are likely
****, here are the worst-case scenario charges your partner might face:
- Theft or Fraud: If intentional misappropriation is proven, it could lead to criminal charges.
- Civil Liability: Potential lawsuits for breach of fiduciary duty, leading to compensation for losses.
- Wage Garnishment: To repay any debts resulting from personal guarantees.
Would you like more information on defending against these charges or accessing legal resources in Alberta?
Give an idea of sentences
****, if your partner is found guilty of misappropriation, here are potential sentences:
- Theft or Fraud: Up to 10 years imprisonment, depending on the severity and amount involved.
- Civil Liability: Financial compensation through wage garnishment or asset seizure.
- Fines: Significant monetary penalties.
Would you like more information on defending against these charges or finding legal assistance in Alberta?
Even if other partner was doing unfair things drinking going to rehab etc and the down and out business partners family are the ones who gave the loan that bought the business in the first place.
****, here are some considerations given the other partner's actions and your partner's family involvement:
- Mitigating Factors: The other partner's drinking and rehab could impact their credibility.
- Family Loans: Your partner’s family loaning money could be leveraged in negotiations.
- Legal Defense: Emphasize mutual consent and lack of fraudulent intent.
Would you like details on finding legal aid or negotiating with creditors in Alberta?
A year has passed after the supposed misappropriation of funds with no complaints. The complaints only happened after the relationship with contractor and a heated argument a year after the fact of taking the funds which they both did for things they need even though the partner with nothing did take significantly more.
****, the delay in complaints and the circumstances surrounding the accusations can affect the case. Here are some key points to consider:
- Statute of Limitations: The time elapsed since the alleged misappropriation may impact the ability to file claims.
- Mutual Consent: Evidence of mutual consent to use funds could be a strong defense.
- Credibility: The other partner's actions and delay in complaints may affect their credibility.
Would you like more detailed guidance on defending against these claims or finding legal assistance in Alberta?
Overall the business partner who's family leveraged their home to loan the money to buy the business, and who now has nothing because the others completely drained the business account by creating a new business and putting the funds in it, but still the business partner with nothing now over the course of the business spent a total of double the other business partner. But no issue was raised over the business partner taking more than the other, it began in * so for five years and they had great happy days and no issues, it was only after a heated argument that the one partner decided to destroy the other. The one with nothing now always had more bills because he had a wife and family so it was kind of normal that he would be taking more. It did increase but it was never a legal issue u til one partner got mad randomly toward the end
****, here are some crucial points to consider for your partner:
- Documentation: Collect all records showing mutual consent for using business funds.
- Legal Counsel: Essential to review the partnership agreement and defend against accusations.
- Negotiation: Consider mediating with the other partners to resolve disputes amicably.
- Statute of Limitations: The time elapsed since the alleged misappropriation may impact the ability to file claims.
Would you like more detailed guidance on finding free or low-cost legal assistance in Alberta?
Yes much more detailed info on the likelie outcome of the case
****, considering the details of the situation, here are the likely outcomes:
- Civil Lawsuits: High likelihood of civil suits for breach of fiduciary duty and misappropriation of funds. The courts may require your partner to compensate for any proven financial losses.
- Wage Garnishment: Likely if personal guarantees lead to debt collection efforts.
- Criminal Charges: Less likely if mutual consent and lack of fraudulent intent can be demonstrated. The delay in complaints and the other partner's credibility issues (drinking, rehab) could work in your partner's favor.
- Negotiation and Mediation: If successful, could reduce legal and financial consequences.
For your partner, it's crucial to:
- Document Everything: Collect all evidence showing mutual consent and financial transactions.
- Seek Legal Aid: Utilize free or low-cost legal services in Alberta.
Would you like more detailed guidance on accessing specific legal resources or any other aspect of the legal process?
The only concern is criminal charges. So what is that situation. Is there any reason that the individual with nothing has nothing to worry about in terms of imprisonment?
****, the risk of criminal charges depends on several factors:
- Evidence of Intent: If there’s no clear evidence of fraudulent intent, criminal charges are less likely.
- Mutual Consent: If you can prove mutual agreement on fund usage, it strengthens the defense.
- Partner's Credibility: The other partner’s drinking and rehab might weaken their case.
Imprisonment is less likely if these points are proven. Would you like more details on gathering evidence or legal aid in Alberta?
Can there be a guarantee of no imprisonment?
****, there can never be a *% guarantee of no imprisonment, but if your partner can demonstrate mutual consent, lack of fraudulent intent, and the other partner's credibility issues, the risk of imprisonment is significantly reduced.
Would you like more information on gathering evidence or legal aid in Alberta?
So if it wasn't mutual, wouldn't there have been a case 3 years ago?
****, you make a good point. If the use of funds wasn't mutual, it is likely that the issue would have been raised much earlier. The delay in complaints can indeed work in your partner's favor, as it may suggest that the funds' use was accepted until the recent dispute.
Key points to consider:
- Delay in Complaints: Suggests mutual consent or acceptance.
- Gather Evidence: Document all instances of mutual agreement.
- Legal Counsel: Crucial for defending against any claims.
Would you like more detailed guidance on gathering evidence or finding legal aid in Alberta?
But Canada law says another business partner is allowed to drain the business of all funds if they want. There's nothing that makes that illegal
****, business partners in Canada owe each other fiduciary duties, which include acting in the best interest of the business and not misappropriating funds. Draining the business of all funds without consent can be considered a breach of fiduciary duty.
Key points:
- Fiduciary Duty: Partners must act in the business's best interest.
- Legal Recourse: Your partner may have legal grounds to contest the draining of funds.
Would you like more details on finding legal aid or understanding fiduciary duties in Alberta?
Yeah but fiduciary duty isn't grounds for imprisonment
****, you're correct that breach of fiduciary duty alone typically ****sn't lead to imprisonment. However, here are some key points to consider:
- Civil Liability: Breach of fiduciary duty can lead to civil lawsuits and financial compensation.
- Criminal Charges: Only likely if there is clear evidence of fraud or theft.
- Defensive Actions: It's crucial to gather evidence of mutual consent and seek legal counsel.
Would you like more detailed guidance on gathering evidence or finding legal aid in Alberta?
But I thought there can't be theft as each can take what they want
****, in a partnership, even if there is some agreement about using business funds, partners still owe each other fiduciary duties. Here are some key points:
- Fiduciary Duties: Partners must act in the best interest of the business and not misuse funds.
- Mutual Consent: If mutual consent can be proven, it can help defend against accusations.
- Legal Counsel: Essential to navigate these complex issues and defend against potential civil or criminal claims.
Would you like more information on finding legal aid in Alberta?
But not acting in best interest of business is theft?
****, not acting in the best interest of the business isn't automatically considered theft. Here are some key distinctions:
- Fiduciary Duty Breach: This is a civil matter where partners can sue for compensation.
- Theft/Fraud: Requires evidence of intentional misappropriation for personal gain.
Would you like more information on defending against these claims or finding legal aid in Alberta?