If it’s more than you running the business chances are pretty good the relationship between you and other owners will hit a rocky patch at some point, maybe even become adversarial. Breaking up that business relationship can be seen as a divorce. With some thought, planning and proper execution the split need not necessarily a traumatic break up.
A business divorce is a court-ordered dissolution of a business entity that the parties are involved in. They normally involve corporations, limited liability companies or limited partnerships, though they can also involve general partnerships. Depending on the circumstances this type of dissolution may be not possible or is just not the best option for you. There are other methods that can create leverage for you resulting in a better outcome.
How things can or should end depend on a number of things, including the form of the entity and any agreements between the parties. You would also need to consider state statutes, bylaws and any agreements.
If a partner is not controlling the company or part of management, he or she has a right to inspect the books and records of the company as long as there is a proper purpose for seeking these documents.
- In a business divorce you might say you’re “investigating possible mismanagement” or “valuing my interest in the company.”
- Company documents could be the basis for a lawsuit against the managers or directors.
- Your request to look at books and records may spark a discussion between you and management about how your concerns could be resolved.
The stockholder, member or partner can sue the persons or entities controlling the company for damages due to breach of fiduciary duty or the relevant agreements. If successful, on paper this type of action will not break up the relationship, but as a practical matter that may be the best way to settle the case. Continue reading