IfI might get suedby my business partner, how can I protect my personal assets in case of a dirty lawsuit?

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IfI might get suedby my business partner, how can I protect my personal assets in case of a dirty lawsuit?

We have a software biz. We agreed by e-mail in 2008 what we’d do when we break-up but we have no real contract. We each have our own LLC. No joint LLC. I want out. He offered to buy me out for unfair amount. He agreed by email in 2008 if we break-up, a buyout would be an option but if we can’t agree on a fair price, we’d sell to third- party andsplit 50/50. I don’t agree to his buyout price. He insists that I sell to him or he’ll sue. If he sues me and the court finds that I owe him money, would my LLC protect me personally from large debt if I’m unable to pay? Could I close my businessz?

Asked on January 5, 2011 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Whether or not your personal assets could be reached if you are sued depends on what the grounds for the suit are--do they arise out of something your LLC did (e.g. investment by the LLC, business conducted by the LLC, assets owned by the LLC) or something you did (personal services you provided not through your business; sale of intellectual property owned by you, not the LLC; etc.). An LLC will limit your liability--the most you can lose is what you have in the LLC and it's assets--if the LLC is the "guilty," so to speak, party. The fact you have an LLC does not mean that any lawsuit vs. you in  a commercial context is automatically against the LLC. You need to consult with an attorney who can review all the facts of the case in detail to see what your potential liability and best recourse is.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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