Inventor seeking advice
The first case presents Paul Peters as the inventor seeking advice as he deems the various creative inventions will earn him tons of money subject to proper marketing. Ronald Robinson, who is his best friend, has a Bachelor degree in marketing (an MBA) coupled with innovative approaches to marketing goods. The bonus is that Ronald’s cousin Sara Sanders hit it big through the housing boom, thereby has substantial amounts of funds as she is now a millionaire who shows characteristics of a risk-taker in making many investments. The idea Paul has that the mix of his inventions, the best friend’s business skills, and Sara’s money can earn a breakthrough is realistic if the proper engagement and contracting are achieved. The idea seems even more appealing given the cordial relations between the three that may prove beneficiary to business operations subject to proper administration.
I would advise him to form a limited partnership. The mentioned type of business is a type of collaborative effort that entails a general partner and limited partners where one manages the business operations, and an associate or more don’t participate. The other types of partnerships include the general case where all the associates are actively involved in the activities, which isn’t ideal for the example of Peter as Sara acts only as an investor. The proposed business model would entail Peter as the individual in charge assisted by Ronald as Sara acts as the silent partner whose only job is to invest which warrants her share of the profits with limited liability equivalent to investment. I would advise Paul to register with his state dispelling the due process in forming the limited partnership.
The second case reflects Paul, Ronald, and Sara engaged in a collaborative business, which is a limited partnership type as recommended by me. The operations have facilitated good outcomes owing to the rapid prosperity. Paul is upset regarding competitors attempting to follow his footsteps through enacting similar businesses, thereby driving him to lose some money in the enacting cheap pricing to steer off the competition. The hope in the decision is that the initiative the result of veering off the competitors would be followed by a substantial increase in the pricing to fill the gap of the lost profits. The tenants of a limited business allow Paul to inculcate such enactments which he deems would act as a beneficiary to the system in the long run. It, however, seems imperative for him to do the right thing as his decisions affect his partners and him.
Paul acts as the general partner, which issues him the charge to steer forward the obligations detailed in the business ventures. It offers him supremacy of making a choice and following through his decision-making. The limited partner, i.e., Sara, has limitations limiting her to the commercial aspect of providing investment and sharing in the profits. Ronald acts as an advisory subject to his skills and scholarly capabilities in the field of marketing. The drive by Paul is warranted though it seems wrong as it would be prudent of him to seek Ronald’s advice in the subject at hand before making a choice. Proper managers bear the skill of coordination that ensures ideal enactments that propel the profit margins to higher levels coupled with handling the competition. Safe to say the power of the general partners shouldn’t be abused as it would adversely affect the business operations.
Paul decides to halt the business engagement after a decade with the company capturing a substantial amount of debt incurred. The establishment owes other entities such as the manufacturers of the products (WeDoItAll) funds to the tune of over $20,000, the bank (Investors Bank) a sum of approximately $28,000, and lastly the limited partner Sara. She has facilitated loans to the amount of $18,000 in a bid to keep the company afloat. The trouble sets Paul to thinking filing for bankruptcy as the best solution. As Paul’s advisor, I would advise him that dissolving the limited partnership is highly dependent on the dissolution provisions of the partnership contract coupled with the state laws where he registered the business. The steps to follow are gradual and may require much of him.
The first thing I would advise him to do is to call a meeting of the partners. The second step reflects a vote for dissolving the partnership as dictated by the state laws. The third step as he is the sole general partner is to file for a certificate of cancellation at the state business registrar. The filing should be at the same office that he went for the limited partnership’s certificate. Filing for bankruptcy would lead to the appointment of a trustee mandated to liquidate company assets then distribute the cash proceeds to the creditors. I would advise Peter to go for it though subject to convincing and agreeing with Sara and Ronald. The liability which rests on Peter as the general partner may transcend to the silent partners such as the case of Sara, where she guaranteed a debt through the loan.