How to Handle a Partnership Dispute
The start of a business can be one of the most exhilarating experiences for any entrepreneur. While a vast majority of entrepreneurs will look outside their business for potential threats to their business, the unfortunate reality is that the greatest threat to a business comes from within.
For business owners throughout California, partnership disputes are the greatest threat to the success of their business. A partnership dispute can arise for many reasons, including: Cash flow shortages, A dispute over decisions made for the business, The prospect of greater success and Economic pressures caused by the change in the personal life of a partner.
When you are experiencing serious business disputes that are not only escalating but are also affecting the integrity of the business, it is critically important to act swiftly and implement measures that will secure the business. Moreover, the equity interests you have worked tirelessly to create should also be safeguarded.
The Responsibility of Business Partners
Based on state law, business partners have fiduciary obligations and duties. Fiduciary duties not only affect the business internally, they also affect outside opportunities that could be tangentially related to the organization. It is critically important that business partners understand their rights and obligations as it pertains to business associates and other partners.
Partnership disputes can be harmful to a business as they can result in a loss of profits as well as prevent the business from growing and expanding. With careful planning, however, it may be possible to prevent a disastrous outcome.
Partnership Dissolution as a Possible Solution
In a situation where business partners are unable to continue working alongside one another for the benefit of the business, the best solution may be to dissolve the business entity. Partnership dissolution is a complex process that requires extensive legal experience. The two types of business partnership dissolutions come in the form of:
- Voluntary Dissolution
Partnerships can be dissolved at any given time when all partners agree to it. When dissolving a business partnership, the following issues should be considered: Division of business assets and debts, Providing a notice to clients or customers, Potential liability for on-going business projects, and the assumption of liabilities.
- Involuntary Dissolution
When a partnership is particularly dire for one of the partners, that partner can file a lawsuit seeking a business partnership dissolution intended for partners who cannot agree. Once a judge has been assigned to the case, the court will order an accounting and division of the business’ assets and liabilities. When there is an issue of improper conduct by a business partner, an independent receiver will likely be appointed to handle the management of the business while the dissolution is pending.
Seek the Legal Assistance of a Proficient Law Firm
When a business partnership dispute creates a rift that cannot be repaired, the best course of action may be to dissolve the business partnership. If you are facing a business partnership dispute, seek the legal support of a proficient law firm that will ensure your legal rights are protected and ensure you avoid unnecessary risk and liability.
As one of the Inland Empire’s most recognized law firms, the Knez Law Group specializes in partnership dispute cases. The firm will conduct a thorough investigation of the issues surrounding the dispute to ensure the rights and interests of their clients are safeguarded. If you are facing a partnership dispute or are contemplating entering into a partnership, consider obtaining the legal support of the Knez Law Group for support. Contact the firm today for a complimentary consultation.
Matthew J. Knez graduated from the University of Redlands in California where he earned a Bachelor of Arts degree in Creative Writing. He went on to pursue his Law Degree at the University of LaVerne, College of Law in Ontario, California. While pursuing his law degree he earned various awards, including CALI Award in Torts and he was on the Dean’s List. Mr. Knez was also a member of the Justice and Immigration Clinic where he worked with people seeking asylum into the United States from countries where they had experienced persecution or threat of persecution. Additionally, Mr. Knez was a member of Law Review where he was an Associate Editor and published a Law Review article on California family custody move-away cases.