Partnership dissolution

A large proportion of my work involves assisting and advising in relation to partnership dissolution. At any given time I am likely to be involved in advising on potential dissolution of a partnership, or on an already-dissolved partnership.

Most of the dissolution matters that I have advised on have been concluded with a negotiated agreement. Where required though I have assisted clients to pursue or defend court proceedings or arbitrations. I have been involved in a number of such cases, some that have settled part way through, and others that have gone all of the way through to trial and judgment.

As well as being a partnership disputes lawyer, I am also a long-standing CEDR-accredited mediator. This training assists me when considering potential ways in which a partnership dispute might be resolved.

If you require assistance in relation to dissolving a partnership business, you should take advice as soon as possible, preferably before any steps to dissolve it are taken. Ill-considered actions (or refraining from taking appropriate action) can give rise to unintended and unwelcome consequences. Find out more about how I can assist you.

Partnership dissolution issues

Some dissolutions are expected and consensual. Others can be unexpected and/or highly contentious. Some result in litigation or arbitration. Others give rise to issues that can be resolved by negotiation, and finalised with a partnership dissolution agreement.

General or technical dissolution?

It is important to distinguish between general partnership dissolution and technical partnership dissolution. In summary, technical dissolution avoids a full winding up of the partnership business. A technical dissolution can arise on a simple retirement under a pre-agreed partnership agreement, or sometimes what starts as a potential general dissolution is resolved by entry into a dissolution agreement. In a technical dissolution, one or more partners or a third party acquire the assets and goodwill of the firm and take it forward as a going concern business.

In such circumstances it is often the case that third parties including clients or customers, banks, suppliers, insurers, HMRC and others will be content to continue all of the contractual and other arrangements that were in place previously. Normally no issues arise with employees.

Consequences of general dissolution of a partnership

In a general dissolution, no-one acquires the firm and it is wound up, meaning that some or all of its assets are sold, not necessarily all to the same person, and the business eventually ceases trading. This process is often supervised by the court. It can take many years. Contracts may have to be terminated early, leases may continue but rent still has to be paid until the end of the lease term (unless and until a surrender can be agreed and paid for), employees are likely to have to be made redundant, or will consider themselves as having been constructively dismissed (and therefore they may be entitled to statutory payments and/or damages), and banks are likely to call in facilities and loans, sooner rather than later, and there may well be other significant impacts. The financial consequences can be grim, and the partners may have to devote a lot of unremunerated time over what can be a long period.

How to dissolve a partnership

Dissolution of a partnership business can arise in a number of different ways. In a partnership at will, a partner can usually dissolve the partnership by giving notice of dissolution. Conduct that is inconsistent with an intention to continue in partnership will sometimes suffice, though reliance on conduct creates uncertainties as to whether the conduct really does amount to dissolution.

If possible it is best to agree all of the terms of a dissolution in advance and set out those terms in a formal partnership dissolution agreement. Under such an agreement it might for example be agreed that one or more partners will be treated as having retired, and that the other partners will take the business on as a going concern, and (if it is considered that the business has value over and above its balance sheet value) an agreed price might be paid .

My experience as a partnership disputes lawyer

I have experience of acting for partners or firms in a wide variety of business sectors including professional practices (solicitors, accountants, surveyors, patent attorneys, doctors, dentists), private equity, property investment/development, construction, music industry, leisure, farming, retail, and care homes.

If you would like a confidential, no obligation discussion to explore how I can assist you, please contact me.

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