Can My Business Partner Push Me Out?

Nobody goes into a new business venture with a partner thinking it is all going to go horribly wrong at some point. Unfortunately, it is not uncommon for things to start deteriorating in your business relationship. This can happen for a number of reasons including how profits are distributed, the perception that one party is putting all the work in or disagreements regarding the direction the business should take. The split may well be amicable but in this article, can my business partner push me out, we take a look at the process involved.

Free Initial Telephone Discussion

For a free initial discussion on how we can help you deal with the legal implications of your business partner trying to push you out of your business, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help stop matters escalating, saving you money and also avoiding the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.

What are the steps involved?

The first thing to remember is to really try and keep things as amicable as possible for as long as possible. Try and keep the emotion and your personal relationship out off the picture for as long as you can. Keep calm and remain unemotional even if you feel your partner is being aggressive or unnecessarily obstructive. There needs to be clear and open channels of communications and the last thing you want is for any split to become acrimonious which can have a detrimental effect on the value of your shares. It is at this point that litigation can appear on the horizon and this can prove to be both lengthy and also expensive.

After you have got a handle on the situation, you should consult your partnership agreement as this should provide you with more information regarding any rights and obligations of the parties.

Consult your partnership agreement.

If your partner is actively trying to push you out, your partnership agreement should contain within it the terms for the split.  Assuming this document was drafted well right at the beginning when you went into business, it will contain clauses detailing the factors that may lead to the dissolution of the partnership and even the procedure to be followed to save and if all else fails, terminate the partnership. If the business is incorporated, you will also need to check the articles of Association and Memorandum.

The partnership agreement should also set out a disputes resolution process which could actually bring the two parties back together and save the business relationship if so desired.

If dissolution is inevitable, the partnership agreement should set out how assets and liabilities are to be divided and how trading will be wound up.

What should I do if there is no partnership agreement?

If there is no Partnership Agreement in place, the first thing you must do is cease trading under the current business name.

Under these circumstances, the dissolution of your partnership will be governed by the Partnership Act 1890. This act states that without an agreement to the contrary, any one of the partners may issue notice dissolving the partnership and no minimum notice period is required.

If this is the situation you find yourself in, the act sets out what the procedure is for dealing with any assets and liabilities:

• All debts and liabilities of the partnership must be paid.
• Payment of advances made by partners to the partnership must then be repaid.
• Any capital owed to the partners is paid.
• Anything that remains is divided between the partners according to the percentage of profits they are due.

If there are only losses then all partners must contribute towards those in accordance with their profit share percentages.

What Other Things Do You Need To Consider?

Once your partner has decided to force you out, and irrespective of whether or not you have a partnership agreement in place, you need to obtain expert legal advice. This is to ensure the terms of any existing agreements are adhered to and you are paid all the monies owed to you.

Then comes the moment when you need to decide exactly what you are looking for from the outcome and what are the consequences of you exiting. Is your partner looking to carry on the business without you by their side? If this is the case, they will probably have to buy you out or consider a third party to come in and buy you out. Alternatively, they could, for whatever reason, be looking to wind up the company completely.

How we can help

We have a proven track-record of dealing with partnership and shareholder disputes. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.

How to Contact our Corporate Solicitors

It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of reducing risk, saving you money and ensuring you achieve a positive outcome.

To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Corporate, News Tagged as