My business partner leaving

Discussion in 'Growing and Managing a Business' started by sweet.memories, Nov 11, 2009.

  1. sweet.memories

    sweet.memories
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    I am in a small retail business. I have recently brought a new partner but has now chosen to sell her share. I trade from a leased property but my partner has refused to sign the new lease. Am i within my rights to demand the keys back? Is she still allowed to come on the premise as she still owns the other 50% of the business? If I can demand the keys back and she refuses, where do I stand after that?
    I would be grateful if anybody could give me concrete legal advice that is concrete. Thank you,
     
  2. myte

    myte
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    I think you should talk to her, you should thoroughly to exchange views, see what she thought, I think through your sincere will impress him with you to sign a new lease
     
  3. sweet.memories

    sweet.memories
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    Hi Myte

    Thanks for the response, I don't completely understand what you mean by that reply. Let me explain a bit further.

    We are now seemingly past the negotiation stage, my business partner has been to see a solicitor whom has told her that she has the right to put a block on the business bank account (which, sadly is completely in her name). Tomorrow I will be re-signing the lease, no matter what happens. Once I have re-signed the lease - I want to know what rights I have regarding the premises, do I have rights to demand my property keys back from my business partner AND am I within my rights to disallow her to come on the property and work - baring in mind - it will be my name and my name only on the lease as she has refused to have anything to do with it.

    Thanks in advance.
    Glenn
     
  4. BenP

    BenP
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    Rep

    If you've signed a partnership contract, 50/50, the terms tend to be negative for the one who decides to stay in the business. The biggest downfall of a partnership is that if one chooses to leave, the company usually dissolves. At this point you can fulfill your remaining obligations, pay off all of your debts, and divide up whatever assets are left. For future references you might want to sign a buy-out agreement or a buy-sell agreement within a partnership to legally set the course of action for the event of a partner leaving. If this or research on the internet doesn't seem to help you, you're fool-proof option is asking a lawyer.

    And if you re-sign the lease outside of the partnership, as in a whole new contract with the owner under your name solely, not your company name, and she has no hands in it (make sure you end all contracts with her before you do this to be sure of your immunity) than you should be fine. But same as the first option, it would be wise to consult a lawyer.

    -Ben
     
  5. worldbiztalk

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    agree with benp "it would be wise to consult a lawyer.
     
  6. Elomelo

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    A partner may leave. This is not any critical situation. You do not need any law expert. Keep faith on her and discuss everything openly and every problem will be solved nicely.
     
  7. Fergal

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    Welcome to Business Advice Forum sweet.memories, thanks for posting your business questions and sorry to hear about the difficulties you are experiencing. I'd agree with our other members that you should consult with a lawyer on this issue. Some questions and issues that you might want to consider are;

    Do you have a partnership agreement signed with this person?

    Have you considered changing the locks on the premises? Changing the locks often isn't as expensive as you might think. I once purchased a house from someone (whom I didn't know or hadn't met), who for some bizarre reason informed my solicitor that she was keeping a set of keys to the house. I had the locks changed and sent a letter to her solicitor saying that she would be treated as a burglar if she entered the house.

    If your name is the only name on the lease it is difficult to see how anyone else would have a right to enter the premises, without your permission.

    Is there any money in the business bank account? Does it have an overdraft or any other credit facility?

    How does the business operate from a legal perspective - is it a partnership, a sole trader, limited company or other legal entity?

    If you can please provide a little more info on these areas, we will do our best to help you further. And as has already been said, you should get professional legal advice.

    Good luck with it and please keep us posted.
     
  8. sweet.memories

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    We do have a partnership verbal agreement but a formal one was going to be written up after the lease had been signed. We agreed to be 50/50 partners but has now refused to sign the lease.
    I have considered changing the locks but i did not know where i would stand if i did. I had heard a funny law about changing them but i didn't know what would happen if i did. The lease is in my name as she has flatly refused to sign the new lease. She has never registered as a sole trader so a partnership agreement couldn't be draw up until she had.

    There is no money in the business account as everything was taking out to pay bills. It doesn't have an overdraft.

    I was hoping nobody else could come on the premise without my permission but can I demand the keys back. If I can, and she refuses, what do I do then?
     
  9. Fergal

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    Sounds like you do need professional legal advice. I'd be suggest that you ask your legal advisor for his / her opinion on the implications of the following.

    There is no money in the bank account, so let your partner keep it. However, contact the bank and inform them that you are no longer associated with that account.

    Changing the locks.

    Signing the lease in your own name only.

    Registering a new business, perhaps as a sole trader, where you are the sole owner.

    If your legal advice confirms that you can do all of this, then you will have full control and ownership of the business and wont need to worry about your previous partner.
     
  10. scifi

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    Its good to hear that you have a small retail business...But it seems that you are facing an HR issue currently with your partner..There are following possibilities-
    1-Purchase her part of full shares from him or the part of her shares...then you will have all the rights in the operation and decision processes of your business...You can infact offer her this advice that she can sell a little percentage of her share to you and then can enjoy profits according to her share holding..I think she will happily agreed to this since she doesn't have to work anymore( actually this will keep him out of the operation of your business and he will not bother you any more..Moreover since you are the major shareholder ..you have the right over business..you can draw salary and profits both ..but he will be liable for profits only....One more thing it is not always necessary that profits should be drawn ..they can kept as retained earning too for reinvesting in the business..You still have right to salary which she doesn't have)..This should solve your problem...:)
    2- Talk to him openly..why she is behaving like that and what does she wants..hold a round table meeting and clear the differences if you think that you need his expertise for your business .........
    3-
    It depends whether you have a joint lease agreement or in whom name agreement has been drafted,,,..

    4- Revised and restructured your agreement to limited liability partnership...
     
  11. eddane

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    Oh dear, Not a great situation. I can't offer any advice on this one.
    i think that this illustrates the important of deciding on what will happen if the business relationship breaks down before going into partnership with someone.


    Good luck
    Ed
     
  12. sweet.memories

    sweet.memories
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    Hi Fergal

    There is no partnership agreement, she never signed one. The business is sole trader in my name, the lease is signed by myself and myself only.

    It was a verbal agreement, no documents signed/witnessed.

    No solicitors involved, etc...

    She still has not returned the keys and I'm doing all the work for the business now even though she still owns 50%, I have offered to buy her out in installments to which she responded "I'm going to see my solicitor" and we have heard nothing since - that was 6 days ago - a week tomorrow. Am I now within my rights to refuse my offer ? If she comes back and says "I will accept your offer" can I turn round and say that I don't want to buy her share now and she will have to wait until a buyer comes along?

    Again, I appreciate the advice.

    Glenn
     
  13. Fergal

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    Glenn, you should not be obliged to pay anything based on your previous offer. In all honesty I don't know why you would pay this person anything for half of the business, when it appears that you already have full ownership and control of it.

    Have you sought professional legal advice yet? This is something you really need to do quickly. Your legal advisor might ask you to communicate the fact that your previous offer no longer stands, to your old partner.
     
  14. sweet.memories

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    Thanks for the advice.
    I am the only lease holder for the next 3 years. I sold 50 % of the business to her and she did not go the solicitor and do anything legaly binding or have any legal paper work drawn up. All we did was sign a letter my partner had written herself, this is what it says:

    (name of business)
    (business adress)
    (date)

    Paid cheque to (Person A) T/A (business name) on the 21st August 2009 for the sum of £6,200.00 in respect of 50/50 Partnership of (business name) between (person A) and myself (person B)

    Recieved with thanks

    (person A)
    signed Person A

    This is the only document I and myself alone signed to prove she had paid the money. She has taken the keys and refused to take them. We offered to buy her out with payments that the business can afford per month. She has refused. I had a meeting with her on 10th November with her, before her shift started. I gave her the option of staying and working or leave. She chose to leave and has not returned since or even got in touch apart from a Solicitor letter that came this Saturday from her solicitor. In that letter, it stated that she had invested her monies into the business and the monies for this should have been put into the business account. There was no business acount, it was only under her name and myself as a authorisation, which she closed down. Also in the letter, it states i have to put the monies into the business account despite me not having any access to it?
    Also, in the letter, it says she is in arrears for her wages of apparent £600 per month. Before she bought into the business, i did indeed tell her there may be £600 a month if we had a good month. I also said to her that we may have to take less if bills has to be paid and we do not take as much profit. I do have a witness to this. At the end of this letter, I have been advised to pay her a set amount over a period of time which i have more or less offered. I cannot give a set amount as i do not know my takings every month.

    Can anybody else help me with this. I am seeing a solicitor tomorrow but i am wanting concrete advice to act on.
    Thanks
     
  15. Fergal

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    sweet.memories I'm glad to hear that you have a solicitor's appointment, this is something you really need. Take solicitor's letter that you have received, to the appointment, along with any other paperwork you have in relation to this matter.

    Write a brief summary of what happened - keep it as brief and concise as possible, while still covering all the main points and give this to your solicitor. Also, write down a list of questions that you wish to ask your solicitor. Bring this list with you to the appointment to ensure that you cover everything you need to, with him or her.

    The better prepared you are for the meeting with your solicitor, the more helpful that meeting will be to you.

    Good luck with it and please post back to tell us how things work out with your solicitor.
     
  16. akashjshah

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    You need to consult with a lawyer.

    Starting your own company can have great perks. You are your own boss. You get to control your hours. Great, right? Well some budding entrepreneurs rush into the whole startup process and go right at the “business” aspect of their company. Well, one step many entrepreneurs forget to do is hiring a lawyer. The image of a lawyer is usually intimidating for most entrepreneurs. They avoid using them as much as they can. Many think that it will be very expensive. I know that when I started my first company, entering into those fancy offices and grand conference rooms seemed extremely intimidating. But, trust me, in the long run it’s the right choice.

    Read "An Entrepreneur's Guide to a Lawyer"
     
  17. BenjaminCip

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    Hi Fergal, I think it would be great if you could create a legal issue category. I have created one on my membership site, and it's very focused on questions like on this thread.
     
  18. Fergal

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    Thanks for the suggestion BenjaminCip, it's something I'll keep in mind as we continue to grow and develop.
     

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