Business Partnership asset advice

Discussion in 'Growing and Managing a Business' started by Elizabeth Mc, Sep 15, 2010.

  1. Elizabeth Mc

    Elizabeth Mc
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    I have a partnership with one other partner (50/50 ownership). The partnership is registered for VAT and owns two properties which are worth a lot less then the mortgages against them and the income from them does not cover the cost of the parnership (i.e. the mortgages, mgt fees, upkeep, VAT etc) never mind providing an income for the directors of the partnership. What can we do? If the partnership is insolvent are we liable for the full mortgages or how does it work? Thanks EM
     
  2. PaulPinnacle

    PaulPinnacle
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    Is there a partnership agreement in place? Does this cover issues such as the ones you now face? Have you spoken to an accountant (or any professional advisor)? (If not, you should as a priority)

    It all depends on the specifics of the mortgage as to exactly who is responsible for the debt (and in what proportion), but in the vast majority of cases in a partnership like this you would both be 50% liable for the relevant debts.

    You don't mention which jurisdiction you're in, but as a general rule of thumb (I'm not aware of any exceptions, but it's possible that there might be some), as it's a partnership there is no limit to the liability for either of the parties involved and you would be liable and responsible for all debts in a personal capacity.

    Best of luck resolving the issue and I hope it works out.
     
  3. Fergal

    Fergal
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    Welcome to our business forum Elizabeth Mc, sorry to hear about your predicament. Unfortunately it's an all too common situation for people, during these difficult financial times. I'd also like to know what country or state you are in.

    What legal form is the partnership in? E.g. have you formed a limited company or are you registered as a partnership?

    Are the mortgages in your personal names or in the name of the business?

    Are there any personal guarantees involved?
     

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