Business Partner bankcrupt

[evo1200]

My business partner maybe going bankcrupt soon and we have a business which is a limited Co with shares split 50 50 and doing well.

Can any one give me a indication on how it could effect me and my half of the business?

 

[ald1]

A few matters spring immediately to mind:
1. I'm not sure if your business partner is a Director, if he is he cannot continue in that role once made bankcrupt - you made need to look at changing the management of the company;
2. His shares may be sold to realise assets for the creditors. This would be an opportunity for you to aquire the shares, obviously there may be difficulties if a new 50% shareholder comes on board;
3. If he has signed any personal guarantees (e.g. to the bank, landlord etc) in favour of the company, these often have clauses allowing the guarantee to be called in when a bankcruptcy occurs. This may be less of an issue if the company is doing well, but it would be worth checking.

 

[Upshot Media]

I assume you have a shareholders agreements? Any well written agreement will take into consideration situations like this, his shares will/could be sold but if you should be given 1st refusal on them as a 50% shareholder of the company.

The value of the shares depends on the business and in many cases if you have a shareholders agreement this would also include share value, usually reviewed from time to time, yearly in some cases

if you dno't have a shareholders agreement, you should (hopefully) still be given 1st refusal to buy the shares

Hope it helps
Stuart

 

[evo1200]

Thanks for the input guys.

There isn't any personal guarantees & I will look into the shareholders agreement.

Also he is a director as well.

 

[james2004]

I had the exact same problem, we were 2 days from a director going banckrupt and managed to get the shares from her at a good price, we were very concerned as the shares could of valued at loads more than we could afford, if they had fallen in to the hands of a receiver. In the end we got the director out of banckruptcy by buying her shares from her at a fair rate. Prob less than they were really valued at, but not enough to raise suspicion with the HMRC.

She was then not bankrupt but we had protected the company by getting her back on track.

Its always a worry to em when a director of a business falls into this situation, worrying for running the company!