How to leave a Limited Partnership

[gprovan]

Hi All,

I've been in a 50/50 partnership in a Limited Company for about 9 years now.
It's only the 2 of us in the business and although I like my partner personally, I don't like working with him, and I'm now keen to leave.

We don't have a partnership agreement and my partner is very uncommunicative and obtuse. This is one of the main reasons I wish to leave. I may be happy to just walk away, if it came to it.

I would like to mention that I am a creative type and not very good or knowledgeable with taxes, finances, etc. This is one of the few things my partner does in the business but I was always happy for this to be the case.

Here are some of the considerations.
• We have several machines on lease in both our names. How easy would it to get out of these and what else would I have to consider?
• I don't know how much the business is worth, but it would mostly be from assets rather than any customer base or potential business.
• The company doesn't really make much in the way of profit apart from paying each other a variable wage.
• One thing I thought about was just giving him my share of the business in exchange for signing over the leases. However, I don't know if this is possible or a good idea.
• Another option is to leave but let him farm some of the work to me in a freelance capacity. I can work from home without being in the office. This may be messy but again I don't know if it's a good idea.

Any advice or considerations would be very welcome. Thanks

 

[The Byre]

Partnerships are always a PITA. The last option sounds best, though I would just divide the company into two halves and if you feel like giving him the office and machines and he actually wants them, well, go ahead!

Strong fences make for good neighbours. You'll probably find that a purely business relationship with you two paying one another for the work you do will end up being for the best.

 

[gprovan]

Thanks for the reply.

The last option sounds best, though I would just divide the company into two halves and if you feel like giving him the office and machines and he actually wants them, well, go ahead!

This is my favoured option for the moment. It gives me a bit of security until I find something else.

How do you think any debts and leases would be handled?

 

[Mr D]

Is the company going to carry on? Or is it being closed down?

 

[The Byre]

How do you think any debts and leases would be handled?

You two knuckleheads are just going to have to sit down and talk this thing through, though (as with all negotiations) you are going to have to prepare very, very thoroughly and actually have a very clear idea of what it is that you want.

 

[kulture]

You also need to establish the existing legal set up. Is it a limited company or a partnership? When you say things are leased in your names, are they really or are they actually leased to the company? Regarding and lease/document have you ever signed a personal guarantee?

Any lease or document you signed as an individual (as oposed to a company director on behalf of the company) may be a problem. You probably cannot just sign them over. It is more likely you will need a new agreement or at the very least a signed document from the other party (not your partner) agreeing to release you. This may prove difficult.

 

[gprovan]

Is the company going to carry on? Or is it being closed down?

We're still going at the moment, but have been hobbling along for a few years.
I haven't spoken to him yet. Firstly because I don't know what I'm going to do, and secondly because it's extremely difficult to talk to him.

I would say that the ball would be mostly in his court. I'm happy if necessary to walk away, but if he wants to keep the business running, he'll have to decide what he wants.

 

[Mr D]

We're still going at the moment, but have been hobbling along for a few years.
I haven't spoken to him yet. Firstly because I don't know what I'm going to do, and secondly because it's extremely difficult to talk to him.

I would say that the ball would be mostly in his court. I'm happy if necessary to walk away, but if he wants to keep the business running, he'll have to decide what he wants.

Debts and leases the company has will belong to the company.
The company is a separate legal entity from its owners.

Though if anything has a personal guarantee from you then it can be difficult to get out of that.