An operating agreement will not save any startup. I had a strong operating agreement and had an investor, Bill Cohen , CEO of Dillon Yarn who was determined that he was taking the company at any cost as the company was gaining traction and national retail distribution. The company had just recovered from rebuilding / repairing custom built manufacturing equipment and other issues and was in multinational out licensing discussion with global consumer products companies.
Arctic Ease through his actions was basically destroyed. He nows own the assets, after he tried several times to place the company in a bankruptcy with him as the stalking horse. Cohen, through his attorney offered me 7% equity in his newco if I would place the company into bankruptcy to rid the company of shareholders and not pay outstanding debt, this was refused. I experienced mutiple attempts to try to force me to stay and help him repair the damage he caused, many in my opinion would be call this slavery. I have been asked many times if is he successful with the assets, I can’t tell you it’s not something I care about or will spend anytime on. It’s a waste of the most valuable asset one has, time.
We are in a 3 year legal battle presently and once all is resolved, I look forward to sharing 100% of the details so that others can learn from my experience and the lessons I learned.
My advice for anyone who goes through something similar, is to take the time you need to digest what happened, break down the steps that lead to this and learn from the experience. Don’t let anger drive you, if you do, you lose again. Anger is poison in your veins and it prevents you from moving forward.
Bottom line, from my experience, either partners and investors- who are your partnets- are working together on a common goal or the odds of success are destroyed and you need to walk away. No operating agreement can fix this very basic operating requirement of any business, startup, relationship or partnership, that is trust. Once it’s broken, the odds are you will not succeed at any endeavor.
With time and taking the opportunity to digest things, will recover and move on to bigger opportunities with a very strong determination to succeed.
