Capital and distributions recovered
Background
L co-founded two auto detailing shops with two friends and put in about $120,000 for a 30% stake. The other partner handled purchasing, scheduling and bookkeeping. Quarterly distributions were paid in the first year. In the second year the partner said business was hard and the distributions stopped. When L asked to see the books, he received one handmade profit statement. The other side also pointed to the agreement, which gave the managing partner "full responsibility for day-to-day operations," and argued a minority owner had no right to review the books.
Challenges
- Apart from that statement, L had only a few chat messages and no records showing where the money had gone.
- L's goal was clear: get his money back and leave, without putting the shops at risk. If the shops closed, his 30% would be worth little.
Strategy
- We did not rush into litigation. In March 2025 we sent a written demand to inspect the books, itemizing bank statements, tax returns, purchase invoices and shareholder meeting minutes.
- The other side kept delaying and produced only part of the records. In July 2025 we filed suit to compel an inspection of the books and to hold the managing partner accountable.
- The bank statements were produced in December 2025, after the court ordered it. They showed a monthly "management fee" paid to a company owned by the managing partner's spouse. Most supplies were also bought from a supplier run by his relative, at noticeably higher prices.
- We had an accountant recalculate two years of profit at market prices and used that figure in negotiations.
Case Timeline
| Date | Milestone |
|---|---|
| March 2025 | Retained Lingtu Law; written demand to inspect the books |
| July 2025 | Written accountability demand to the company; lawsuit filed to compel inspection and hold the manager liable |
| December 2025 | Bank statements obtained through the court process |
| May 2026 | Mediation produced a share buyback agreement |
| Mid-September 2026 | Buyer secured financing; buyback funds deposited through escrow; L completed his exit |
Outcome
The other side agreed to buy back L's shares at the recalculated profit figure. L signed and exited, recovering his capital and the distributions owed to him. The shops continued operating.