You Made a Business Mistake: What's Next?
Billy and Marcy want to sue their business partner Jack because Jack took out a loan the company couldn’t afford to pay, and now the company is broke.
But Jack was acting in good faith and was doing his best to make the company successful.
This kind of disagreement feels bad, but still, Jack should not be personally liable for company debt.
Of course, business partners should trust each other to do their best, but they also want to limit their exposure in case of mistakes or bad results.
I told them to focus on solutions instead, like building the company back up. In the meantime, if they didn’t want Billy as partner anymore, they might consider buying him out while the valuation would be at its lowest. And they definitely should review their operating agreement to make sure major business decisions cannot be made by one person alone.
What would you have advised them to do?