Land development partnership gone bad, what can 2 partners do to 3rd

[Chris Adams]

I have been hired as a GC to take over the day to day construction, marketing, and sales for a subdivision of new construction duplex's. In short I am 99% in charge of everything. Unfortunately the subdivision is almost in foreclosure with the bank.

The subdivision is owned by 3 partners, 1 was the money man and has 45% ownership, the 2nd is his son, with 10% ownership, and the 3rd partner was in charge of running the subdivision and has 45% ownership.

All of the infrastructure was developed when the subdivision was sold to the partners. Partner #2 was one of the original owners and came with when the subdivision was sold.

OK now it has been some 4-5years later and this project is failing miserably, they have sold about 2 addresses, and turned 2 other addresses into rentals that break even.

This market should support at least 12-14 sales per year minimum. From my forensic research, attempting to create sworn statements, and talking with all of the subs, and suppliers of which I have known oat of them for 15+ years. Partner #2 has no idea what the hell he is doing.

Scheduling was a nightmare, paperwork is a disaster, warranty repairs are not being done in a timely manner, and sometimes not at all. And sales are a joke.

So know the property is very near foreclosure and partners 1 & 3 have hired me. I am sitting down with the bank to discuss a restructuring/sales plan I have put together.

How can we get rid of Partner #2? It is my understanding he did not invest any $ to get his shares. We can prove beyond a shadow of a doubt that he is incompetent, and severely underperformed his responsibilities.

Can the others partners negotiate with the bank to assume their portion of the debt and not his?

Can these partners try to buy the subdivision from the bank at a reduced price, and leave partner #2 responsible for anything?

Any ideas appreciated

[Account Closed]

You need to tread carefully, or this thread is going to be Exhibit A in the 3rd partner's minority shareholder oppression lawsuit against your new clients.