Disagreements and disputes are simply a part of life, and they occasionally occur between business partners as well. While attempts are generally made to come to agreements and move forward together, sometimes it is clear that parting ways is the best financial or life decision for both parties. In this blog, we’ll offer a few tips to make your split as easy and affordable as possible.
Review Business Partnership Agreement
In the early stages of any business partnership, a document is usually created outlining the details of the partnership. The partnership agreement likely contains plans to be adhered to in the event that dissolution is necessary due to subpar profits, retirement, or other scenarios. Usually, problems arise if the document is vague or if an agreement was never documented in the first place. In these cases, turning to business litigation and relying on a court to divide assets is generally the pursued route forward.
Total Assets and Liabilities
Assets and liabilities must be divided as part of the splitting process, and that means that they must first be calculated. If you are unable to come to an agreement on these calculations, that is generally a sign that you could benefit from a third party to assist in the assessment. Be sure to have these factors in mind when auditing your business before a split:
- Ownership interest of each partner
- Liabilities involving creditors
- Assets owned jointly by the partnership
- The total value of the business
Creating the Dissolution Agreement
After auditing assets and liabilities and coming to a mutual agreement, it’s time to draft the dissolution agreement. As you do so, there are several critical questions partners should be sure to address:
- How will liabilities be divided?
- What course of legal action will be taken if a partner fails to pay creditors?
- How will assets be divided once creditors are paid?
- How will property ownership be handled?
- If any partners are unable to cover debts, how will they be repaid?
- Which partner is responsible for the dissolution procedure?
Once these questions are ironed out and the document has been signed, it’s time to file the document with the state of Maryland. If you are once again unable to reach an agreement, the next course of action will likely be to turn to the courts for a resolution.
Contact Mobley & Brown, LLP for Help with Your Business Partnership Split
If you are searching for a business attorney in Maryland and unsure where to turn, contact Mobley and Brown, LLP today. Our experienced legal team will work with you to meet your needs. Call us now at (410) 385-0398.