On behalf of Kadish & Associates Law Group posted in Business Litigation on Wednesday, June 8, 2016.
As some Arizona business owners are already aware, going into business with family members can be problematic at times. When one member of the family fails to live up to his or her obligations in some way, disputes are not always easily resolved, and relationships can become strained. In some cases, the company concludes that the only way to rectify the situation is to file business litigation against that party in order to ensure its continued success.
For example, Arizona readers would probably not be surprised to know that owning an NHL hockey team is expensive. In fact, Peter Karmanos Jr., the owner of one such team took out several loans from the NHL and banks between 2000 and 2013 and pledged assets of the family partnership as collateral. In addition, Karmanos Jr. took out two loans from the family partnership totalling over $170 million. One of Karmanos Jr.’s sons alleges that his father has failed to make payments on those loans since June 2013.
The family partnership, which includes Karmanos Jr. and three of his sons, ultimately had to send a demand letter to him, insisting that the money be repaid in accordance with the promissory notes he signed when the loans were made. Reports indicate that there is no evidence that the money was even used for its intended purpose, which was to provide funds for the Carolina Hurricanes. When payment was not made within 30 days of the demand letter, the entire amount of each note became due.
The family partnership felt it was necessary to file business litigation against Karmanos Jr. in an attempt to recover the monies he borrowed. The outcome of that litigation remains to be seen. Unfortunately, this type of litigation is sometimes necessary when it appears that one member of a company appears to be taking advantage of familial relationships that could ultimately damage the company.
Source: canescountry.com, “Karmanos family partnership files breach of contract suit against Carolina Hurricanes owner Peter Karmanos Jr. for $105 million“, Brian Leblanc, June 1, 2016