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That is true. If this were a corporation, and you became a 20% shareholder, that would be one thing as far as being personally liable.
But, since this was a sole proprietorship, your involvement with it is going to be in the nature of some kind of partnership or joint venture. Your liability for debts in that case is possible.
If I were you, I think I'd be happy to get an agreement where he pays you $5K, you get bought out and are no longer any kind of partner or joint venturer, and you get a release of all liabilities (to the max extent possible).
It's one thing to have worked for a year and a half for little or nothing, in a biz venture you put no money into, and simply walk away. It's another thing to do that, but also have creditors (like on the $60K line) coming after you as a partner of the business.
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