It usually starts with something small: a vendor payment you don’t recognize, personal charges on the company card, or a bank balance lower than it should be. Then you start looking and find more, like payments to companies your partner controls, customers steered to a side business, or records that are suddenly hard to get. One of these alone may have an innocent explanation. Several together usually do not, and the person you built the company with may have been taking from it.
The first few weeks matter. Resist the urge to confront your partner, lock them out of accounts, or move company money to protect it, because those moves can tip them off or hand them claims against you. Instead, quietly save copies of bank and card statements, invoices, and emails, keep them somewhere your partner can’t reach, and find your operating, partnership, or shareholder agreement. North Carolina law also gives LLC members and shareholders the right to inspect company books and records, even when a partner controls them day to day.
Your options depend on how the business is set up. Partners owe each other fiduciary duties, while LLC managers owe their duties to the company, so the claim may belong to the business rather than to you personally. In that case, North Carolina generally requires a written demand on the company and a 90-day wait before suing on its behalf. A claim for breach of fiduciary duty generally must be brought within three years, so waiting for things to sort themselves out can cost you. Depending on the facts, you may be able to recover what was taken, force an accounting, or negotiate a buyout.
Lord & Lindley represents business owners across North Carolina in disputes with partners and co-owners, and our attorneys have tried these cases before judges and juries. If you think your business partner is taking from the company, call us at (704) 457-1010 or look at our website lordlindley.com. The first conversation is the time to learn where you stand and which options are still open.