Family business split - advice needed!

[matthew9212]

Can anyone give me a little advice on what my options are. I am in business with my father and brother and relationships between myself and my brother and my father and brother has taken a massive crash. My brother has not now turned up for work for almost two months although he is still paying himself wages. He fobs us off everday saying he'll be in the next day but never shows!

He has control of ALL the finances, bank account, credit cards, VAT and is also in huge personal debt, 20K minimum. The business has been making money but we've recently noticed large sums of money being transfered between our business account and his personal account over the past 6 months. He has also been using the company credit card for personal buys and only when confronted will he pay this back, usually with another credit card that the business pays though! He has also taken out debt in my father's name without his consent or knowledge. When confronted he said he would change/pay off this this but hasn't (approx 10K). In general, it almost looks as though he is paying off all his debt with our and our business funds and generating business debt. His personal debt has little to do with the business and a result of his lifestyle. We are starting to think that he is about to do a runner as he recently divorced his wife and met someone new who's very manipulative and not from the area.

Both myself and my father would love to carry on the business but without my brother but he will now not answer phone calls, pay company bills, pay our wages etc etc... He's now caliming depression but spent the last weekend with his partner and child on holiday!!! I have pleaded with him to come in and chat and make a plan of action to wind the business up but he won't. He has personal issues against my father and me and we're begining to feel that he is not only about to run but somehow leave us a massive mess.

What are my options? Solicitor time and how much would this cost?

I'm beginning to think i won't have any money left for a solicitor!!!

 

[internetspaceships]

Get the police involved.

It's your business and it appears he has stolen from it. You need to separate the family and personal issues from your company issues. Sadly this is a part of running a business that many people fail to achieve.

You need to achieve this and deal with it appropriately. IF he's actually done what you think he has then he needs to pay the price for it. If you cannot make him do this then you need to seriously consider whether you are cut out to run a business.

Before the bleeding hearts pull my advice apart consider this. If it was any other employee what would you be doing right now? He lost his rights to being treated as a family member IN THE BUSINESS the moment he felt it was ok to steal from you.

Remember that.

It was his choice.

 

[123Simples]

This is one good reason why you should never work with family - it becomes too personal. Also, it was unwise to have only one name on the account. If he is in debt and suffering from depression (which isn't impossible by any stretch of the imagination) then you could be in big trouble.

Go to the bank and see if you can have the account frozen for now, but if it is all in his name anyway, then that might be an issue in itself. The fact is that it is only your business if you have some control on the finance side - which it appears you've said you don't. Seek legal advice

 

[internetspaceships]

This is one good reason why you should never work with family - it becomes too personal. Also, it was unwise to have only one name on the account. If he is in debt and suffering from depression (which isn't impossible by any stretch of the imagination) then you could be in big trouble.

Go to the bank and see if you can have the account frozen for now, but if it is all in his name anyway, then that might be an issue in itself. The fact is that it is only your business if you have some control on the finance side - which it appears you've said you don't. Seek legal advice

Good points.

GET control of the finance side. As in immediately.

 

[kulture]

Something does not add up here. He is not coming to work but has control of the money, money has been going out suspiciously for six months. He is paying himself wages but not you or your father. What are you waiting for. Freeze the bank account. Take control.

 

[Anna Chandley]

Is the business a limited company or partnership?

If it is a limited company who owns the shares and who are the directors?

Anan

 

[matthew9212]

This is one good reason why you should never work with family - it becomes too personal. Also, it was unwise to have only one name on the account. If he is in debt and suffering from depression (which isn't impossible by any stretch of the imagination) then you could be in big trouble.

Go to the bank and see if you can have the account frozen for now, but if it is all in his name anyway, then that might be an issue in itself. The fact is that it is only your business if you have some control on the finance side - which it appears you've said you don't. Seek legal advice

Thanks for the advice.
All three of our names are on the business current account/ credit card account but only he knows all the passwords and has the security fob etc etc. I have considered freezing the account but not sure of the repercusions concerning our out-goings... rent, rates, water etc

We are only in a partnership (not a contract, being family and all) and wondered if there are any laws as such that i can threaten him with as he's quite a voitile person... If i go for the jugular i.e. straight to a solicitor it might enrage him into creating more mess within our finances.

 

[matthew9212]

Is the business a limited company or partnership?

If it is a limited company who owns the shares and who are the directors?

Anan

Hi,

It's just a partnership and as we were so close as a family unit didn't expect the total breakdown in relationships. We have all put in roughly an equal amount of money...

 

[The Resolver]

The police are unlikely to become involved unless the theft has been covered up with fraudulent paperwork (which given the information you have, I assume is unlikely to be the case.)

Freezing the account can cause damage to the business that can exceed the damage to be avoided.

If its a limited company and he is a director then you need to call an emergency Board meeting to remove him from the Bank mandate followed by an Extraordinary General meeting (with 21 days notice to him of the intention to call the EGM) to dismiss him.

Make sure you have good evidence to support the allegations as otherwise he may have a claim for compensation for unfair dismissal and/or breach of his directors service contract.

 

[EM223]

I knew of a similar situation where an individual was covering their own debt (which they incurred through gambling) with company money. Its a really sticky situation when its a family member as you feel you should have some loyalty to them, however its clear that he has show you and your father no such respect! Like others have said, get control of finances ASAP and confront your brother to get him out of company control.

 

[Anna Chandley]

As a partnership your options are limited. If your brother will not resign from the partnership of his own accord you would need to dissolve the partnership and start again.

In the absence of a partnership agreement the Partnership Act 1890 will apply which says that a partnership can be dissolved by any of the partners giving notice that they want to dissolve the partnership. Once the partnership is dissolved you would need to share out any assets between the original partners (if there are any assets left) and then you could start a new partnership with your father.

You should be aware that all partners are jointly and severally liable for partnership debts, for example if your brother runs up partnership debts then you or your father could be pursued for the whole amount if your brother cannot pay his share. If you do dissolve the partnership then you must write to all creditors, suppliers etc to state that the partnership has been dissolved. I would also recommend writing to suppliers etc if your brother leaves the partnership to say he is no longer a partner. (Suppliers cannot claim that they believed your brother was authorised to act for the partnership once they have been notified)

Maybe you could use the threat of dissolving the partnership as leverage to persuade your brother to resign as partner.

Anna

 

[Paul Kelly ICHYB]

Contact the bank, remove him as an authorised party and get the details reissued!

 

[matthew9212]

As a partnership your options are limited. If your brother will not resign from the partnership of his own accord you would need to dissolve the partnership and start again.

In the absence of a partnership agreement the Partnership Act 1890 will apply which says that a partnership can be dissolved by any of the partners giving notice that they want to dissolve the partnership. Once the partnership is dissolved you would need to share out any assets between the original partners (if there are any assets left) and then you could start a new partnership with your father.

You should be aware that all partners are jointly and severally liable for partnership debts, for example if your brother runs up partnership debts then you or your father could be pursued for the whole amount if your brother cannot pay his share. If you do dissolve the partnership then you must write to all creditors, suppliers etc to state that the partnership has been dissolved. I would also recommend writing to suppliers etc if your brother leaves the partnership to say he is no longer a partner. (Suppliers cannot claim that they believed your brother was authorised to act for the partnership once they have been notified)

Maybe you could use the threat of dissolving the partnership as leverage to persuade your brother to resign as partner.

Anna

I have threatened him with the company dissolvement but he's now saying we must resign and we need his consent to sell the assets? I am seeking legal advice but he's making this so difficult as still not coming into work only form of communication is text messaging. He seems determined to build up as much debt in all our names? What can be done other than freezing him out of the bank account? Just recently found out he hadn't filed our self assesment tax forms for 2009-2010 and 2010-2011. He now has the all the accounts after accessing the business after hours. He also hasn't paid any of the last VAT bills on time either! How much do you think this will cost in accountancy and solicitor fees or are there ways to get this done free? It looks like we're going to be flat broke by him?

 

[EM223]

To be honest your brother sounds like a nasty piece of work and has left you in a terrible position. He obviously had no care for the business and used it only for an easy way to get some extra cash. I'm afraid it sounds like hes really screwed you over with this!