Partnership & Corporate Dissolution
Where major shareholders or business partners are unable to continue in business together, they may need to dissolve their business entity. A partnership or corporate dissolution is often complex and requiring the advice and assistance of an attorney. A business dissolution is, in many ways, a “business divorce” – with all the emotional disappointment of a failed relationship. In addition to providing consul regarding the boundaries of existing agreements and their intersection with the statutory law, an attorney can help keep an emotional distance so that issues stay focused and dialogue constructive.
Voluntary Dissolution. A partnership or corporation may be dissolved at any time with the agreement of the partners or major shareholders. Principal issues that need to be negotiated involve notice to clients, responsibility and ownership of on-going projects, division of business property as well as assumption of liabilities. In certain situations, non-competition issues also may exist. A written agreement covering the details of the dissolution is important. Once an agreement is finalized, the partners or shareholders then easily divide their business interests and dissolve the business entity.
Involuntary Dissolution. Where the partners or major shareholders are unable to agree upon the terms of their separation or where the relationship has deteriorated beyond meaningful negotiation, a partner or major shareholder may need to file a lawsuit seeking dissolution of the business entity. In a dissolution lawsuit, the partner or major shareholder asks the Court to order the payment of liabilities, order a division of assets, and order a dissolution of the business entity. An important part of a dissolution lawsuit is the right to seek an accounting from the controlling defendant. An accounting is a formalized report of all income, expenses, assets and liabilities during a period of time; it is often rather complex, requiring the assistance of an attorney and/or accountant to prepare.
Controlling an Alleged Wronger: Appointment of a Receiver. In cases where a partner or major shareholder suspects or has proof that the parties in control of the business have obtained an unfair and undue profit, the court will take measures prior to conclusion of the lawsuit to monitor the business. Upon a showing of necessity, the court may appoint an independent receiver to manage the business pending resolution the dissolution lawsuit; or as an alternative, the court may order the controlling party to prepare and submit periodic reports or accounts prior to conclusion of the dissolution lawsuit.
An experienced attorney can help negotiation a timely and cost-effective buy-out or dissolution of a joint venture business, or successfully handle a dissolution action.
If you have a question about your legal rights, or wish to speak to an attorney about your situation, please call us today at 510-663-9240, or contact us online to discuss your legal rights.