Help dissolving partnership and selling

[wahwahfiddle]

Hi there, I would greatly appreciate any advice. I am based in Scotland and set up a partnership with two others three years ago to start up a website. We have a partnership agreement that divides profits or debts between us equally.

Recently we have been running at a loss with an outstanding loan of around 3K. It has become obvious that one of the partners has not been pulling his weight and I have therefore decided to give my 3 month notice to the others to dissolve the partnership.

One of the partners has now come forward with the proposition to take on the business himself and take on the debt with it. I would be happy with this but am wondering the best way to do this in order that I am not linked to the business and debt in the future?

Is it possible to just transfer everything with bank accounts, service providers and the loan into his name? The main concern is the loan which was signed by me and him. He would prefer to continue to pay that off monthly but would he have to take out another loan to pay this one off?

Finally, what documents would need to be signed in order for our partnership to be properly terminated?

Many thanks.

[KeithGreen]

I would say you certainly need a commercial lawyer to ensure that the business and any liabilities are transferred into his name.

For the loan, you are both probably jointly and severally liable for this. The bank may agree to transfer this into your business partner's name. If not he will need another loan in his own name and you would need to ensure that the old loan is paid off.

There doesn't seem to be any conflict of interest here so possibly you could both use the same lawyer to keep costs down.

Take appropriate legal advice, list all of the matters you need to be resolved and get at least 3 quotes for fees.

[mahutchinson]

The loan cannot be changed as the bank would not agree to this - it needs paying off and renewing if necessary. The Partnership consists of whoever is a partner at the time and the Agreement would provide for changes to the partners. If it is being dissolved then the assets need distributing back to the partners again in line with the Agreement and the back account cleared and closed. Once this is done the Partnership will be terminated although a lawyer might draft a short deed of dissolution setting out the actions the partners agreed to take to complete the termination. If you want to pass the assets straight over to the partner continuing you will need to sort out a sale and purchase agreement between him and the partnership and then transfer all the assets to him from the partnership and clear and close the bank account.