[Asaph]

Hi, I have a company in Canada threatening to sue for a webserver. My dad used to be associated with my company and he signed up for a webserver (renting it on the internet) and he didn't tell me that it was a contract that said if you cancelled the account, you were liable for 1 years worth of the fees immediately. Then my dad left the company and he isn't on good terms with me anymore.

I cancelled the account to cut costs and then found out they said I owed them $2500.00. Our website hasn't made money yet, and so we couldn't work out a payment arrangement with them that they would accept. Then a canadian lawyer called and I made an arrangement for $200/month. I live in the US in Indiana. Anyway I sent them a check and it bounced. Now they are saying that in Canada it is a crime to write a bad check. It's not like I did it on purpose...

They are saying that if I don't pay them $2500 by 3-30-07 then they will sue my company. The company is an LLC (Limited Liability Company). The attorney is impossible to deal with. The web server company is a good company but they have such thick French accents that it's hard to talk to them also. We do not have $2500, and don't even have $400 to send them to cover the old check and give them a new check! I don't know what to do and would appreciate any advice on this.

[excon]

Our website hasn't made money yet, and so we couldn't work out a payment arrangment with them

Hello Asaph:

Starting a new company is hard enough without all the problems you DIDN'T anticipate. But, those problems DID happen and you're in deep trouble. I don't know what your business plan is. I don't know what your website does. I don't know how close it is to making money or if ever will make money.

What I do know, is that you're undercapitalized, and that by itself, is going to kill you. I don't care how close you are to making money.

Unless your OWN company is a corporation, you're probably going to have to pay, and your dad is liable for half. I don't know how far down the road you'll have to wait before you actually have to proffer payment, but the longer it is, the more it's going to be. And, if you wait too long, they'll put you out of business with a judgment.

If it were me, and you have a good business plan, I'd raise the money to pay them and give you a cushion until your business has the time it needs to make money - assuming that it is every going to make money.

I'm pretty skeptical about websites making money, if you couldn't already tell.

excon