Is it Blackmail?

[SkylarPat92]

Long story short, i need to get out of the toxic 50/50 ownership with my business partner.

They aren't willing to sell, and i am not willing to hang around as they drag the business under!

I am going to make one last effort to buy their 50% otherwise i am going to liquidate the company so that i can get some of my investment back, being the largest credior of the business (approx 95%)

"Sell or i am liquidating"... is that blackmail?

Would be worded better than that, but thats the main point of the discussion!

Thanks everyone!

 

[DontAsk]

If you liquidate you lose everything, so why not offer to sell to him for some % of what the business owes you, or you liquidate.

 

[japancool]

I assume you mean you're going to issue a winding up order?

Are you a director?

But in answer to your question, no, I wouldn't call it blackmail. Would you be prepared to sell your half to them to recoup some of your money?

 

[Chris Ashdown]

If its 50/50 then i don't think you have enough votes to close the company down without the other (partner) agreeing most companies require 75% of the shareholders to agree

 

[DontAsk]

If its 50/50 then i don't think you have enough votes to close the company down without the other (partner) agreeing most companies require 75% of the shareholders to agree

Does he need the vote as a creditor?

 

[japancool]

And can the company afford to repay your loan in full without becoming insolvent?

 

[SkylarPat92]

If you liquidate you lose everything, so why not offer to sell to him for some % of what the business owes you, or you liquidate.

Sorry, when i said Long Story Short, i really did mean short.
Liquidate, buy assets and restart the business again with me being sole shareholder.

After speaking to insolvancey experts, it seems the quickest and easiest way to go.
However, i'd far prefer to buy the 50%, which is why i was wanting to know if it would be "blackmail" if i offered an ultimatium

 

[Paul Kelly ICHYB]

No, it's business, but if they say no, not much else you can do.

 

[Mark T Jones]

Not blackmail, one possible option

As I see it, options include

- Sell the business whole (probably not worth it)
- They buy you out
- You buy them out
- Liquidate


Which is their favourite?

 

[fantheflames]

How did your business relationship break down? If they don't want to sell, ask them to put an offer on the table to buy you out.

 

[Lisa Thomas]

If its 50/50 then i don't think you have enough votes to close the company down without the other (partner) agreeing most companies require 75% of the shareholders to agree

That will be academic if liquidate through the Court.

 

[Lisa Thomas]

Sorry, when i said Long Story Short, i really did mean short.
Liquidate, buy assets and restart the business again with me being sole shareholder.

After speaking to insolvancey experts, it seems the quickest and easiest way to go.
However, i'd far prefer to buy the 50%, which is why i was wanting to know if it would be "blackmail" if i offered an ultimatium

It won't be the quickest route, if the shareholder will not vote in favour of the resolutions to liquidate voluntarily.

Because a CVL will then be off the table and your only recouse seems to be a compulsory liquidation/winding up through the court which will likely take over 3 months.

Also there is always a risk the assets will be sold to the other Director if they take an interest.

 

[japancool]

It won't be the quickest route, if the shareholder will not vote in favour of the resolutions to liquidate voluntarily.

Because a CVL will then be off the table and your only recouse seems to be a compulsory liquidation/winding up through the court which will likely take over 3 months.

Also there is always a risk the assets will be sold to the other Director if they take an interest.

A DL is repayable on demand, so if he demands it back, and that would push the company into insolvency, would that not then require it to enter some kind of insolvency proceeding? And then the DL would be repaid at the same rate as all the other creditors.

 

[Lisa Thomas]

A DL is repayable on demand, so if he demands it back, and that would push the company into insolvency, would that not then require it to enter some kind of insolvency proceeding? And then the DL would be repaid at the same rate as all the other creditors.

Hi Japancool

No. Just because a company is technically insolvent, that does not guarantee it will enter a formal insolvency process.

This can be enforced by creditors or the directors and shareholders.

A creditor can force the company into compulsory liquidation/winding up via the Court.

So the Director, with his creditor hat on due to the outstanding DLA could petition the court for a winding up Order. That will probably take about 3 months before the company is liquidated.

The alternative is for the Directors and shareholders to liquidate the company voluntarily via a Creditors Voluntary Liquidation ("CVL") but if the other shareholder votes against the resolutions a CVL will not be an option. So then alternatively the Director can petition the court on the basis that the Company is insolvent and it would be just and equitable to liquidate it.

The DLA claim will likely be an unsecured debt.

The liquidator's costs and expenses rank first.

Then the preferential creditors, which is an element of the Redundancy Payments Office/employee claims and HMRC.

Then if there is anything left it will be divided pro rata between the unsecured creditors.

 

[japancool]

Thanks for clarifying @Lisa Thomas.

 

[Lisa Thomas]

Slap my wrist - I forgot to mention the secure creditors rank between the preferential and unsecured creditors!

 

[Socio South West]

Lots of advice here - some routes potentially expensive in terms of time, money and stress.

No mention of the amounts involved.

There is always a case for taking a dose of humble pie, learning the lesson and walking away. OP has to be the judge of the point at which that becomes the strategy.