Protecting Your Interests in a Partnership Dissolution
Dec. 29, 2022
If you are in a business partnership with one or more people, you know how much hard work goes into maintaining the business, how much each partner has to contribute to make it all work, and the financial responsibilities each partner takes on. Therefore, when the time comes to dissolve this partnership for one reason or another, it is essential that this be done in the correct manner to protect your interests.
If you are in the Birmingham, Alabama area or anywhere in the state—or the Florida Panhandle— and wish to speak with a business litigation attorney about your partnership dissolution, reach out to Clark Law Firm PC.
Common Reasons for Dissolving the Partnership
There are many reasons an individual may wish to withdraw from a partnership, and winding down a partnership business is a regular occurrence. One of the most common reasons this happens is that the business isn’t economically sustainable anymore. Market changes occur all the time, and a company that was profitable 10 years ago may not be doing as well today. One or more partners may wish to cut their losses and move on to something else. Changes like this also occur with the death or retirement of a partner, or simply a change in one of the partner’s goals or desired direction. Of course, there might be other reasons, such as distrusting one of your partners or wishing to extract yourself from a risky business deal.
The Process of Partnership Dissolution
It’s important to follow all the correct steps when dissolving a partnership, or else you could be burdened with legal obligations connected to the business down the road. The first step is to take a vote among the partners to formally dissolve the partnership, and this should be recorded in writing. Next, you’ll have to come to an agreement on how all debts, profits, and future liabilities will be handled after the split. Once this has been decided and recorded, you will provide notice to interested parties about the dissolution to allow for creditors to make claims on partnership assets. Once all debts and obligations are resolved, you may elect to file or record a dissolution agreement. There may also be other additional dissolution forms specific to the state in which your partnership does business. Contact your state’s secretary of state office to ask about their requirements since this won’t be the same from state to state.
Perhaps the most important thing you can do for yourself in this situation is hire a business law attorney with whom you can consult and who will represent your interests. An experienced attorney can help you review all legal documents and even help you write up your dissolution agreement so it’s legally binding and covers all relevant issues. You don’t need to rush this process, and it will be worth the time and money you put into it. Take the time along with your attorney to assess all existing agreements and consider how the dissolution will affect them.
It’s also important not to overlook the step of giving written notice of dissolution to vendors and clients.
Clark Law Firm: Trusted Legal Representation
You deserve to have your rights protected throughout the partnership dissolution process. If you’re currently in a business partnership that you want out of, you need to work with a skilled business litigation attorney who can help you understand all your options and secure your economic interests. Contact Clark Law Firm PC in Birmingham, Alabama today to schedule a consultation.