There are 3 principal''s in a business venture, each owning 33.33%. The business has "supposedly" not been doing so well over the past few years.

This is a very complicating situation.  The answer to this question would normally involve the type of entity for the business (LLC, corporation, etc.).  Given the structure of the question, 3 people jointly in a business venture would be treated under Tennessee law as a general partnership and each person would be a general partner.  The ownership in the partnership is a separate issue from performing work for the partnership and being entitled to be paid.  Absent a partnership agreement, each general partner can make decisions about employment for the company and could decide the pay rate for an employee.  The problem is with the general partner setting his own pay rate as he does owe a fiduciary duty to his other partners.  The overall answer is that the 3 partners really need to consider incorporating and at the same time documenting the relationship among the parties as to decision making and governance.  For the current scenario, there is no clear answer in that if this matter went to court, a judge would most likely place some value on the work Principal #1 performed for the venture, but how much would be in the court's discretion (absent an agreement among the parties). This answer is for general informational purposes only and is not intended to constitute legal advice or a recommended course of action in any given situation. This answer is not intended to be, and should not be, relied upon by the recipient in making decisions of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult independent counsel before making any decisions or taking any action concerning the matters in this answer. This answer does not create an attorney-client relationship between the author and the recipient.

It is likely that Principal 1 has a right to some form of compensation for work completed.  Without some written agreement, he likely will be able to be compensated either partially or fully without the other owner's permission (assuming he/she can prove that he/she earned $40,000 annually) because the statute of limitation for recovery of personal property in Tennessee is 3 years, and the tolling of the statute has yet to run on all or the last 2 years (depending on when the suit would be filed). For more information on bankruptcy visit my website at www.alsobrooklaw.com. This is not intended to be legal advice, and is general in its nature. No attorney-client relationship exists or is formed by this information. Furthermore, this does not represent the views or opinions of LexisNexis or its affiliated companies.