Escaping my business partner

Olzki

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Jun 17, 2019
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Hello. I am the co-owner of a small business that has been pretty successful over the two and a half years it has been running. Our turnover has been steadily increasing month after month, and while we aren't able to pay ourselves great salaries, we are happy with how things have been going, generally.

However, my relationship with my business partner is "problematic".

I am not perfect, and this is my first go at running a smaller business, but i work hard, show up, have great ideas, and have positive relationships with our staff and customers. However, he constantly blames and bullies me over everything that goes wrong. He has no issue with verbally abusing me and humiliating me in front of customers., who then do not return. He is extremely aggressive and hostile towards me, and he believes that I am conspiring against him, and deliberately sabotaging the business, and has accused me of all sorts of bizarre behaviour, ranging from taking drugs prior to a work shift, to alienating a member of staff who has decided to leave (when in fact she is just leaving to focus on her masters degree).

All of this behaviour I have tried hard to understand, and to endure. I feel that I have worked hard to not let it drain my positivity, but recently an incident occurred where my business partner had been drinking, and chose to come into the business premises. He verbally assaulted me in front of a customer, accused me of various things i am definitely not guilty of, or responsible for, and then attempted to block my exit from the premises, and refused to allow me to leave until i threatened to call the police.

This was extremely scary, and it is not the first time he has behaved in such an extreme way, after consuming alcohol, while i have been at work, and he was not supposed to be. I no longer feel safe around him, and as such I have not returned to work since the incident 4 days ago.

We are about half way through a five year lease on our business premises. We do not have any kind of written partnership agreement between us. When we opened we roughly put in the same amount of money, although I put in a couple of thousand pounds more because he struggled to raise his share of the funds.

I have decided that the best thing for me to do to keep safe and to protect my well being is to leave the business. I have spoken to him in the past about buying me out, as he clearly wants to run the business without me, but he refuses, and has made it clear that he wants me to leave, and to leave with nothing. I have spoken to him about trying the sell the business, and to both walk away with some money, but again, he rejects that idea.

I have given up on the idea of buying him out, partly because has definitely chipped away at my confidence over the last couple of years, and I'm now not sure I could run the business alone, and also because he lives directly opposite the business premises, which I would find challenging and uncomfortable on a daily basis.

If anyone has any ideas or advice as to how I can navigate this nightmare, and get my business either back, or closed down as quickly and painlessly as possible, I would definitely appreciate it.
 

Clinton

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    Sorry to hear about your problems.

    Hello. I am the co-owner of a small business that has been pretty successful over the two and a half years it has been running. Our turnover has been steadily increasing month after month, and while we aren't able to pay ourselves great salaries, we are happy with how things have been going, generally.
    Turnover increases are great but at the end of the day if the business is not paying you "great salaries" and generating a profit on top of that it's unlikely to have any resale value.

    Business owners often assume that their business has a value. In the case of most small businesses, especially the ones not making a profit, there is no transferable value. In fact, if one had to put a number to it, it would be a negative number.

    If your investment was a small amount, say under £100K, I recommend you put this down to experience and write off the investment you've already made. It would appear that your leaving is important to you and your mental health. Don't hold that up for a few quid especially if it's highly unlikely you'll get any money out of this. Retain your shareholding (if it's a limited company) and walk away from working in the business.

    But see a lawyer first in case there are any liabilities for which you are personally responsible.
     
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    Olzki

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    Sorry to hear about your problems.


    Turnover increases are great but at the end of the day if the business is not paying you "great salaries" and generating a profit on top of that it's unlikely to have any resale value.

    Business owners often assume that their business has a value. In the case of most small businesses, especially the ones not making a profit, there is no transferable value. In fact, if one had to put a number to it, it would be a negative number.

    If your investment was a small amount, say under £100K, I recommend you put this down to experience and write off the investment you've already made.

    Thanks for the reply - very much appreciated.

    The investment was pretty small, only 12500, and I'm fortunate to be in a relatively good financial situation, so just walking away isn't the end of the world.

    After an earlier aggressive incident, I asked our accountant about getting the business valued and he advised me it wouldn't be worth very much, so I'm aware it's not going to generate much, and we do have some small debts i.e vat, suppliers etc

    Do you have any ideas how to deal with my business partner in the meantime? Family members and business acquaintances have suggested I stay away from the business, and only communicate with him through a solicitor. I certainly don't want to be in a situation where I am alone with him.
     
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    Clinton

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    After an earlier aggressive incident, I asked our accountant about getting the business valued and he advised me it wouldn't be worth very much, so I'm aware it's not going to generate much, and we do have some small debts i.e vat, suppliers etc.
    He's wrong. It may be worth a lot less than "not very much". And the cost of finding a buyer and paying legal fees for the contract etc is more than a couple of thousand pounds!

    How to deal with your partner in the meantime? I've no idea. It depends on whether the business is indeed a "partnership" in the legal sense. It depends on what your personal liabilities are. I suggest you go see a lawyer.
     
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    For your own wellbeing I'd say the best route is simply not to turn up - communicate via email/letter stating clearly that you don't intend to speak directly.

    Beyond that, it really does depend. If you are a Ltd company then you will still be a shareholder, which might be a thorn in the flesh to your partner - He might offer to buy you out just to tidy things up, or he might attempt a 'dirty phoenix@

    it depends how hard you want to fight
     
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    I am not perfect, and this is my first go at running a smaller business, but i work hard, show up, have great ideas, and have positive relationships with our staff and customers. However, he constantly blames and bullies me over everything that goes wrong. He has no issue with verbally abusing me and humiliating me in front of customers., who then do not return. He is extremely aggressive and hostile towards me, and he believes that I am conspiring against him, and deliberately sabotaging the business, and has accused me of all sorts of bizarre behaviour, ranging from taking drugs prior to a work shift, to alienating a member of staff who has decided to leave (when in fact she is just leaving to focus on her masters degree).

    All of this behaviour I have tried hard to understand, and to endure. I feel that I have worked hard to not let it drain my positivity, but recently an incident occurred where my business partner had been drinking, and chose to come into the business premises. He verbally assaulted me in front of a customer, accused me of various things i am definitely not guilty of, or responsible for, and then attempted to block my exit from the premises, and refused to allow me to leave until i threatened to call the police.

    This was extremely scary, and it is not the first time he has behaved in such an extreme way, after consuming alcohol, while i have been at work, and he was not supposed to be. I no longer feel safe around him, and as such I have not returned to work since the incident 4 days ago.
    I assume you are female?

    Regardless of your sex, a quiet word with the police might be in order. Nobody should be subject to this sort of behaviour.

    It's likely the police will send someone around to have a word and maybe give him an official caution.

    Or they might not do anything... depends on who you get.
     
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    What you have there is someone who is a sociopath and possibly a violent one at that. Alcohol and sociopathic tendencies make bad bedfellows. Despite being in my late 60s, I'm 6'2" and I used to box, so people leave me alone. The last idiot that behaved the way your partner is behaving was a drunken fool of about 38. He ended up on the floor dazed and confused. Despite that being the language such people understand fluently, I assume that this is an avenue of action not open to you!

    There is little point involving the rozzers, that tends to just make things worse. I have a far better plan.

    If this is a common law partnership (i.e. not a Ltd.) and you have no partnership agreement, under the good-old Partnership act of 1890, if one partner resigns, the partnership is over and all assets must be divided up equally. The name of the business can be used by both partners. (That is why, after an acrimonious break-up, the band Bucks-Fizz became two lame versions of Bucks-Fizz and both working the holiday camp and cruise circuits!)

    Get a solicitor well versed in company law to draft a letter of resignation and advise you on your next course of action. Simultaneously, start again but take as many staff with you as possible, leaving your idiot partner to struggle on. He wanted you out - well, let him see what that is really like!
     
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    Olzki

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    For your own wellbeing I'd say the best route is simply not to turn up - communicate via email/letter stating clearly that you don't intend to speak directly.

    Beyond that, it really does depend. If you are a Ltd company then you will still be a shareholder, which might be a thorn in the flesh to your partner - He might offer to buy you out just to tidy things up, or he might attempt a 'dirty phoenix@

    it depends how hard you want to fight

    thank you for the advice - I've just spoken to an excellent solicitor, who has given me some good advice as to how to start to unpick the situation. We are not a limited company, we are just business partners, and I'm really not looking to be a thorn in his side; i just want to find a way of getting out of the situation as quickly and painlessly as possible. As for fighting, it's not really my way of doing things; maybe that's part of the problem?
     
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    Olzki

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    I assume you are female?

    Regardless of your sex, a quiet word with the police might be in order. Nobody should be subject to this sort of behaviour.

    It's likely the police will send someone around to have a word and maybe give him an official caution.

    Or they might not do anything... depends on who you get.

    Thanks for the advice. No. I am male. The police in my area have neither the time or the budget to pursue dangerous criminals, so I doubt they'd be interested in this.
     
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    Olzki

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    What you have there is someone who is a sociopath and possibly a violent one at that. Alcohol and sociopathic tendencies make bad bedfellows. Despite being in my late 60s, I'm 6'2" and I used to box, so people leave me alone. The last idiot that behaved the way your partner is behaving was a drunken fool of about 38. He ended up on the floor dazed and confused. Despite that being the language such people understand fluently, I assume that this is an avenue of action not open to you!

    There is little point involving the rozzers, that tends to just make things worse. I have a far better plan.

    If this is a common law partnership (i.e. not a Ltd.) and you have no partnership agreement, under the good-old Partnership act of 1890, if one partner resigns, the partnership is over and all assets must be divided up equally. The name of the business can be used by both partners. (That is why, after an acrimonious break-up, the band Bucks-Fizz became two lame versions of Bucks-Fizz and both working the holiday camp and cruise circuits!)

    Get a solicitor well versed in company law to draft a letter of resignation and advise you on your next course of action. Simultaneously, start again but take as many staff with you as possible, leaving your idiot partner to struggle on. He wanted you out - well, let him see what that is really like!

    Thank you for your excellent advice. Yeah, unfortunately I'm a lover not a fighter, who tends to turn to jelly the moment anyone raises a voice. I wasn't always but about 2 years ago I was the subject of a home invasion which resulted in me getting robbed and beaten. Since then, I get a little nervous when there's aggro about, something my partner knows, and so when he does things like shouts in my face, or blocks my exit, I can't help but think he's doing it deliberately.

    Anyways, its good to hear about the Partnership act, and your advice to get a solicitor is something I'm following up on for sure. I've spoken to one already, and they gave me some great starting advice, and also some bits to follow up on, so at least I've got stuff to be getting on with.
     
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    Lucan Unlordly

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    Despite being in my late 60s, I'm 6'2" and I used to box, so people leave me alone. The last idiot that behaved the way your partner is behaving was a drunken fool of about 38. He ended up on the floor dazed and confused. Despite that being the language such people understand fluently, I assume that this is an avenue of action not open to you!
    Snap! I'm 6'2", early 60's and used to box. Fortunately for wayward associates and me, i've never had to resort to violence to get a result but have had to bite hard on my metaphorical gumshield and write off a few debts when legal action has failed.

    If there's one thing I have learnt, it's that more often than not those who bully and swindle do eventually get their cumuppance. Having chased a guy through the small claims court for a £500 debt that ended up costing me £800, it was a pleasure to hear that some 5 years later his brand new BMW had been trashed and he was up in court for benefits fraud.

    I've got plenty more stories but am saving them for the book ;)
     
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    about 2 years ago I was the subject of a home invasion which resulted in me getting robbed and beaten. Since then, I get a little nervous when there's aggro about.
    Ah! Now that's a situation that can easily be remedied. Firstly, you have to feel secure in your home and when you are out and about. Assuming Taekwondo is not on the cards, a far better option is a couple of dogs. I strongly suggest a female German Shepherd and a male Great Dane, possibly two Great Danes. Female GS are very territorial and very protective. Great Danes are just imposing and when the chips are down, there is just no arguing with a dog that is as big as a man. When my doggy Samuel Augustus Vincent van Doghausen the Third says 'Woof!' in his clear sonorous basso-profundo, people listen.

    The down-side is Great Danes do silly things and think that they are lap dogs.
    Marmaduke.png
     
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    Or you could just buy the other half out, offering them their initial investment.

    That only works if you decide to continue with the business.
     
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    Mr D

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    Ah! Now that's a situation that can easily be remedied. Firstly, you have to feel secure in your home and when you are out and about. Assuming Taekwondo is not on the cards, a far better option is a couple of dogs. I strongly suggest a female German Shepherd and a male Great Dane, possibly two Great Danes. Female GS are very territorial and very protective. Great Danes are just imposing and when the chips are down, there is just no arguing with a dog that is as big as a man. When my doggy Samuel Augustus Vincent van Doghausen the Third says 'Woof!' in his clear sonorous basso-profundo, people listen.

    The down-side is Great Danes do silly things and think that they are lap dogs.
    Marmaduke.png

    Great Danes are lap dogs. Just a very big lap needed.
    Big softies indeed.
    German Shepherds do respond to a stick across the head. Preferrably a metal stick.
     
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    Mr D

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    Until push comes to shove - then all hell breaks loose! They too can be very protective.


    That is the perfect way to instill a fear-aggression response in any dog and is a dangerous thing to do.

    Dangerous compared to getting a chunk of leg being torn off?

    I'm very protective of both my legs. And the rest of me. Dog attacks, its not a police dog trained to hold suspect, what do you do?
     
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    Stop making noises like a bone.

    Failing that, give it the 'Lie down!' command. Works every time. But then, I'm a 'Dog Person' and speak 'dog' fluently. I rescue those Great Danes and GSDs in our area that are deemed too dangerous for normal rehoming.
     
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    Mr D

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    Stop making noises like a bone.

    Failing that, give it the 'Lie down!' command. Works every time. But then, I'm a 'Dog Person' and speak 'dog' fluently. I rescue those Great Danes and GSDs in our area that are deemed too dangerous for normal rehoming.

    I'm a dog person too, I get on great with most of them.

    Except the ones biting me.
     
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    Chris Ashdown

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    Years ago I had a great Dane called Henry, who decided the sofa was his, even if someone got there first he just climbed up and say on their laps, I was once stumped when walking Henry a small tot about 4 who did not come up to henry's shoulders asked "Why have you got such a large dog"
    Great family dogs but a bit clumsy if henry was anything to go by
     
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    Olzki

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    Thanks for all the guidance and information... and dog related anecdotes. Lol.

    I spoke to a good friend yesterday who had an interesting potential solution. She has suggested I offer my business partner a small amount to leave the business; if he chooses not to take it, then I resign and the business gets dissolved, assets get split, any debts get paid and we both walk away with whatever is left over. If he accepts, then I take control of the business and the associated property lease, and then she takes over as my employee. She has successfully run similar businesses to what I currently have, in the past, and she has offered to basically set up her business in the premises, as my employee, and she would pay me a small amount each month to basically do nothing other than let her run her business in my shop.

    That way my business partner gets to leave with something rather than basically nothing, I get to move on with my life, with the bonus of a small monthly payment, and my friend gets to set up the business she wants, without having to have a lump sum of cash to either take over the lease herself, or to buy either myself or my business partner out.

    All of this sounds too good to be true, and I'm still mulling it over. It makes sense in one way, but I'm trying to spot the problems or flaws with the plan. Having had one bad business partner relationship already, I guess I'm a little cautious to readily trust someone.

    If anyone has any thoughts, ideas, or comments I'd be very grateful to hear them.

    P.S. I have a cat - sorry!
     
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    Mr D

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    Thanks for all the guidance and information... and dog related anecdotes. Lol.

    I spoke to a good friend yesterday who had an interesting potential solution. She has suggested I offer my business partner a small amount to leave the business; if he chooses not to take it, then I resign and the business gets dissolved, assets get split, any debts get paid and we both walk away with whatever is left over. If he accepts, then I take control of the business and the associated property lease, and then she takes over as my employee. She has successfully run similar businesses to what I currently have, in the past, and she has offered to basically set up her business in the premises, as my employee, and she would pay me a small amount each month to basically do nothing other than let her run her business in my shop.

    That way my business partner gets to leave with something rather than basically nothing, I get to move on with my life, with the bonus of a small monthly payment, and my friend gets to set up the business she wants, without having to have a lump sum of cash to either take over the lease herself, or to buy either myself or my business partner out.

    All of this sounds too good to be true, and I'm still mulling it over. It makes sense in one way, but I'm trying to spot the problems or flaws with the plan. Having had one bad business partner relationship already, I guess I'm a little cautious to readily trust someone.

    If anyone has any thoughts, ideas, or comments I'd be very grateful to hear them.

    P.S. I have a cat - sorry!

    Sounds reasonable. But will she work as an employee? And not cause trouble.

    Cats and dogs can live together. I take usually at least one cat (can be all 3) walkies with the dog,
     
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    Olzki

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    Sounds reasonable. But will she work as an employee? And not cause trouble.

    Cats and dogs can live together. I take usually at least one cat (can be all 3) walkies with the dog,

    Yes. she suggested a scenario where she would work as my employee, but have pretty much total control over how the shop is run, and I would get a monthly payment from her.

    I would take on the business myself but I'm not sure I have the confidence to run the place by myself, or the desire to be so close to my business partner (he lives directly across the road from the premises).

    As for not causing trouble, I honestly don't know. I would never have thought my business partner would cause the trouble he has, but here we are. Can you ever really trust anyone one hundred percent?
     
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    MOIC

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    My advice is to sever your connection with this man, the business and the leasehold premises, as best way you can, even if it costs you.

    You cannot stay in a business with a psychopath, nor be in business premises which is opposite to where he lives.

    Your friend's advice is OK, but may not turn out the way she envisages. It's better to sever all your connections and do something you will enjoy . . . . and by yourself.

    Speak to a lawyer and advise him of what your preferred outcome is, so he can advise accordingly.

    It may cost you money, but thats nothing compared to your sanity and wellbeing.

    Good luck with the outcome.
     
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    Newchodge

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    IF and it is a big IF, you go with your griend's suggestion you must have a watertight, signed agreement, produced by your solicitor and checked by hers, so that all eventualities are covered.
     
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    Mr D

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    Yes. she suggested a scenario where she would work as my employee, but have pretty much total control over how the shop is run, and I would get a monthly payment from her.

    I would take on the business myself but I'm not sure I have the confidence to run the place by myself, or the desire to be so close to my business partner (he lives directly across the road from the premises).

    As for not causing trouble, I honestly don't know. I would never have thought my business partner would cause the trouble he has, but here we are. Can you ever really trust anyone one hundred percent?

    Ummm… may be missing something here.
    Owner gets profits. Pretty much total control over how shop is run except you would be managing them as owner of business they work for?
    Unless renting to them - a sublet if its allowed - cannot think of a reason they would be paying you monthly. And in that case no need for them to be your employee with all the hassle that entails - wages, pension, national insurance etc.
     
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    Chris Ashdown

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    You could be walking from one nightmare into another

    Your friend wants to use your property and also probably give you another person in the place to see you come to no harm from outside forces, so far so good

    What is the employee part for, you could ask the landlord for a licence for the other person to jointly use the place, giving the landlord better room to evict her if you break the lease, where as a sub lease to her could cause the landlord problems if he wanted you out and so on

    Basically she would pay you a monthly rent of her part

    Problems

    Are you sure after the breakup that your present partner will just let you buy them out and not want a substantial sum for doing so. seems pretty normal according to hundreds of posts on this forum

    A friend at home is a great person, but sometimes things change like you present partner and friendship break down, business is a different relationship from friendship and can cause problems

    Think long and hard about what future you want, consider if home working and online selling would be a better option or a different location, shops are not going to have a easy time in the future

    I do think a dog could help you relax and we took our into our shop every day, so did not have to leave them at home alone

    Make sure all agreements are down in writing and signed and cover every eventuality you can think of similar to a shareholders agreement

    Good luck whatever you chose
     
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    Olzki

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    Wow - it's been a crazy week - thank you to everyone who gave me some brilliant advice and guidance. I am supremely grateful to all of you, for helping me to navigate this situation rather well, all things considered.

    Here's the latest.

    My business partner has agreed for me to buy him out, for a relatively small amount of money (we're currently negotiating a final figure). He is happy to leave pretty much immediately, although we may keep the business going for a week or two more just to make things easier on staff, and suppliers, and the accountants etc. We will ensure that at no time will we be alone together.

    I will be taking on the business alone, and my friend will essentially be running the business, with me as a silent partner/silent boss. I will receive a small fixed amount per month, and she will receive whatever is left. We will be drafting a very water tight and exhaustive contract between us, making it clear who is responsible for what, what happens in the future if anything changes, what financial responsibilities she has to meet etc

    If you recall, we have a 5 year lease on the business premises, with 2.5 years left to go. The landlord has said that they are happy for me to stay in the premises without my business partner, however, they have said that they want the current lease to end in 1 months time, and a brand new 5 year lease will be drafted. I will be financially responsible for the all of the costs relating to the creation of the new lease.

    I have been advised by family members, the friend who is going to be running the business, and another business savvy friend, that a new lease is not required, and I should be able to stay in the premises with the current lease, that has simply been amended to remove my business partner.
    So that still needs to be nailed down.

    All in all, t seems like things are looking up, and I should be able to continue my life, without my business partner, with a small monthly income coming in from the business, without me having to be in the premises so close to my business partner. Result!

    If anyone has advice, warnings, guidance, or information, especially regarding whether I have to have a brand new lease, or if this is just my landlord trying it, please don't hold back!

    Thanks guys!
     
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    Mr D

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    Wow - it's been a crazy week - thank you to everyone who gave me some brilliant advice and guidance. I am supremely grateful to all of you, for helping me to navigate this situation rather well, all things considered.

    Here's the latest.

    My business partner has agreed for me to buy him out, for a relatively small amount of money (we're currently negotiating a final figure). He is happy to leave pretty much immediately, although we may keep the business going for a week or two more just to make things easier on staff, and suppliers, and the accountants etc. We will ensure that at no time will we be alone together.

    I will be taking on the business alone, and my friend will essentially be running the business, with me as a silent partner/silent boss. I will receive a small fixed amount per month, and she will receive whatever is left. We will be drafting a very water tight and exhaustive contract between us, making it clear who is responsible for what, what happens in the future if anything changes, what financial responsibilities she has to meet etc

    If you recall, we have a 5 year lease on the business premises, with 2.5 years left to go. The landlord has said that they are happy for me to stay in the premises without my business partner, however, they have said that they want the current lease to end in 1 months time, and a brand new 5 year lease will be drafted. I will be financially responsible for the all of the costs relating to the creation of the new lease.

    I have been advised by family members, the friend who is going to be running the business, and another business savvy friend, that a new lease is not required, and I should be able to stay in the premises with the current lease, that has simply been amended to remove my business partner.
    So that still needs to be nailed down.

    All in all, t seems like things are looking up, and I should be able to continue my life, without my business partner, with a small monthly income coming in from the business, without me having to be in the premises so close to my business partner. Result!

    If anyone has advice, warnings, guidance, or information, especially regarding whether I have to have a brand new lease, or if this is just my landlord trying it, please don't hold back!

    Thanks guys!

    Glad things are moving forwards so well.
     
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    Remind us, who is the lease currently with?

    I would avoid extending the lease, especially if you will have a PG on it.
     
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    Chris Ashdown

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    The landlord has presumably had both your signatures as a PG, with the main security being seen as the guy with another job, so if it goes tits up that person is the most likely to pay the PG

    I guess the partner will want freedom of the PG and the landlord is reluctant to give it as he has nothing to gain

    Therefore looks like to loose the what he sees as the main pg person, he would like something else as a benefit, hence the request of a new lease

    His & your legal costs could be quite expensive so make sure you really want to continue

    I am guessing your ex partner will sign and agree nothing unless he is released from the PG
     
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    Olzki I read you posting with interest.

    It appears you have nearly reached an agreement with a clear break.

    With regard to the lease. I assume both your names are on the lease, you and your partner. If your partner permits it as part of the separation agreement you can agree to indemnify him against any cost incurred by you with respect to the lease, and then continue the lease until it ends. Then you would not need to involve the landlord, until ofcourse the lease ends and you negotiate another lease. However, a clear break with you taking on the lease would probably suit your partner better and maybe even you too.

    The suggestion of your friend to simply remove your partner as a tenant and continue as normal cannot be done without permission of the landlord and a redraft of the lease
     
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