Did you know that in New York it is harder to divorce a business partner than a spouse? Unlike in marital divorces, there is no guaranty of a divorce as the end goal.
WHAT IS A BUSINESS DIVORCE LAWYER?
Business divorce technically means the legal separation of a business relationship between business owners of a closely held business, meaning a corporation, partnership, or limited liability company owned by only a handful of owners. However, business divorce attorneys do not only deal with separation issues, but also with any kind of dispute arising between business owners. Lately, all such practice has been labeled “business divorce.”
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WHAT IS BUSINESS DIVORCE LAW LIKE?
Business divorce practice is highly emotional because there is always a child involved, the business. You can find all the drama and upheaval of real divorces: betrayal, cheating, lack of communication, lack of financial support, abandonment, disrespect… If the business has been around for a while, we are talking about lifelong careers and dreams being shattered, so it is understandable that the parties to such disputes are in the middle of one of the biggest fights of their lives.
In helping business divorce clients, we are particularly mindful of having empathy and compassion. We are understanding and aware of the feelings and thoughts involved but conscious at every step of the way of acting in a way to resolve the situation and keep the end goal in sight.
WHAT ARE BUSINESS DIVORCE LAWSUITS LIKE?
Business partnership disputes in court often deal with the same set of claims. Claims for breach of fiduciary duties, breach of contract, oppression of minority owners, fraud and illicit competition, access to books and records of the business, dissolution of the business, or buyout. Sometimes the damages caused by the bad apple business partner are so immediate and harmful that courts must be brought in to help with preliminary actions, so-called interim remedies, either a preliminary injunction to immediately cease damaging conduct or to act in a certain way.
Business divorce litigation often does not go to trial. Business partnership disputes in court are often strategic moves to pressure the opposing business partners to come to the negotiation table. That is not to say that we bring actions that have no chance of success; it is just often the case that settlement is the better way of resolving an issue.
WHAT IS THE MOST OVERLOOKED TOOL TO PREVENT ANY BUSINESS PARTNERSHIP DISPUTE?
That is an easy answer. You must have agreements that clearly spell out all the rights and liabilities between business owners, including exit strategies. I guess you could call them prenuptial agreements, but we call them operating agreements, shareholder agreements, or partnership agreements. And that form agreement that came with your online entity formation package is NOT sufficient to protect you, you need an experienced small business lawyer helping you draft these agreements.
