What steps can I take to take over a business whose owner was arrested?

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What steps can I take to take over a business whose owner was arrested?

My friend is a business owner and
recently was arrested and is now facing
a couple of years in jail. There is no
official partner in the business but I
know the ins and outs of the company and
have been very involved since day one.
Is there anyway I could go about running
the company until he comes home? He’s
worked really hard and I don’t want to
see it fail but I don’t know what legal
steps if any I can take to manage the
company.

Asked on July 15, 2017 under Business Law, Virginia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You can run the business if he gives you the authority to do so. He can hire you for the company and give you a title, or he can give you a limited power of attorney (POA) with authority to run his business for him, or he could give you some ownership interest (e.g. make you a partner, make you a member in an LLC, or give you stock in a corporation, depending on how the business is set up). There are pros and cons to each way of doing it, and you will also need to address with him other issues, such as access to and signing authority over business accounts. A business attorney can help you and him pick the correct method and carry it out (and if the business is not valuable enough that it's worthwhile for him to foot the bill for an attorney to get things set up, it's not worth worrying about). The key is, he *must* delegate the power to you in one way or another; you cannot step into his business and run it for him without his consent and authority. (Even if he is currently incarcerated, he can give you this power, though obviously, coordinating, communicating, getting documents signed, etc. will be more awkward and take more time.)


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