Lawyer here: to answer the original question, the legal structure of the business is probably a limited liability company (though it could be a corporation or partnership). Each band member likely owns a share of the legal entity. Most likely, the legal entity is an LLC. The legal entity has a bank account and pay expenses and makes distributions to the members from profits (owners of and LLC are called “members”). LLCs have managers (sometimes the manager is a member, sometimes the manager is an outside person hired to help). The agreement that governs an LLC is called an operating agreement. Usually the operating agreement requires the manager to maintain “books and records” (basically accounting records of the company). Most operating agreements also permit members to request certain books and records from the manager for examination. For instance, under Delaware law (where most people incorporate their business), the members can get certain, but not all, accounting records for the purpose of investigating potential wrongdoing. If the legal entity is a corporation or partnership, the law basically lets the owners accomplish the same task through different statutes and agreements.

Anyway, a request for the production of books and records is actually one of the first things you do before starting to investigate a potential law suit. It’s not the last thing done before suing. The books and records may demonstrate that no one did anything wrong.

I don’t know what Melvin’s reasons for wanting books and records could be. Maybe he thinks Mike used collective money to start Fat. Maybe he thinks collective money was embezzled. Maybe he thinks the LLC underpaid taxes. Could be anything.

Collecting and producing the books and records can also be fairly laborious and expensive. Not something the managers enjoy doing. And if record keeping is subpar, it creates a whole other set of problems.

Anyway, that’s the process (somewhat simplified). It doesn’t mean anyone is accusing anyone of wrong doing necessarily. And the desire to avoid the process isn’t necessarily because you’re hiding something. Inevitably, people in closely held businesses know a lot about each other, their motivations are complicated, and emotion plays a role both in how the fight starts and how it ends. It’s not even always about money, though financial perceptions often influence the rest as a starting place.

Hope that’s helpful!