We opened a business and put the equipment up as collateral for a loan. Made the mistake of taking on a so called business partner that ended up being dishonest. Keep in mind that nothing has been signed, no operating agreement. We ended up having to leave so that we could take other jobs to pay our bills. He said he really wanted to try and keep it open, so trying to help, we left the equipment and continued to pay on the note. Now of course, the business is failing and just found out that he has sold some of the equipment for cash. Again, this equipment is the collateral for our loan. Can he legally just sell equipment that has lien on it? Not sure how to handle. He says we don't know what we are talking about...when we left that equipment became his!
Answer
You need counsel, an attorney and NOW. If the equipment has a valid operative lien, your associate under the cloud of apparent authority has sold items that does NOT belong to him or your company. That may be construed as FRAUD. If this loan was from a bank there may be federal implications. Yes, this is serious. Especially if large amounts are involved.
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The above is not intended nor should it be considered operative legal advice, or the acceptance of representation. It is merely a generalized response to a general legal inquiry. thanks and good luck
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