How to divide assets of a defunct business?


1

I'm going through a breakup right now with my partner, where he and I started the company as 50/50 owners and then later brought on a third party which was then split 38/38/24 between us. This was a mistake for many reasons, which I won't get into within the scope of this forum. Let's just say that he is an IP attorney who has a vested interested in the project, and he's childhood friends with my partner. Add all that up and that equals me being screwed.

When my partner and I first conceptualized the idea, some five years ago, we naively had no founder agreement, no vesting agreement, no milestones, and no reason to think that we would ever be enemies. Flash forward to present day and we're faced with going through mediation (or worse) to decide what is the most equitable way to split up the assets (that I created) and move on.

The reason for my leaving was due in part to my partner's opposing vision of what our project should represent, as well as his inability to complete his tasks which was impeding the development of our project. Basically, I (and a friend that was helping me for free) ended up doing 98% of the work over a year and a half period and now my partners stand to benefit from our tireless efforts. After asking him to take a lesser role in the business and forfeiting some of his equity back into the company, he decided that we should split ways: he maintaining ownership over the current company and I starting anew.

Initially, he agreed to split ways amicably and offered to sign over all assets that I had created: our blog, landing page, prototype, and suggested that we each own a 5% stake in each others company to compensate for the shared IP that was the result of years of conceptualization. This all sounded good except for the fact that he wanted to retain ownership over the name of the project, which is not registered, and the URL.

Although he has owned the domain name for a number of years (he was using it for a previous company) we collectively agreed to use the name for our project. I suggested that he should consider that I spent the past six months creating the brand that's associated with that name, and that the logo (that I created) is associated with our Twitter/Facebook accounts (that I created and maintained) which means he would continue to reap the benefits of the work I put into this company well after I'm gone. His (irrational) response was to pull down the blog, landing page, and eventually terminate my email account until we were able to resolve this. Clearly he didn't see my point.

To arrive at my question, I'm curious if anyone has had a similar experience and, if so, how you handled it. I'd also like to try to figure out, legally speaking, how these facts might be viewed if this ended up going through mediation to try and resolve our grievances, and if I'm entitled to go after him for any damages associated with his negligent actions. His lawyer buddy is already threatening to sue if I use the mark (that I created) and I now feel like somehow I've just gotten screwed out of my own company, even though I was the only one keeping it alive. I'm not going down without a fight, but I also realize that justice is never swift (or cheap), so I'm open to ideas.

Co-Founder Legal

asked Mar 11 '12 at 16:53
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Devin
36 points

1 Answer


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Is it worth the fight? Are the revenues the company is bringing in worth you going down this road? Only if the answer is absolutely yes then I would make the decision to continue, else, I would take the deal you described and he owns the domain and I would move on. Note: Within this deal I would not sign a non-compete contract so that I could take my solution and start anew.

If and only if it's worth it I would recommend you seek the counsel of a qualified attorney who specializes in this sort of issue.

answered Mar 11 '12 at 21:32
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Tim
670 points

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