Partnership Disputes Are Stressful But Don’t Just Walk Away
You Have Rights
Even without good partnership or corporate documents, you still have rights. I strongly encourage you, even if your frustration level has reached the breaking point, to get help with your dispute before things get into criminal territory. Yes, I’ve seen tensions escalate to violence and threats. I’ve seen the books disappear. I’ve seen bank accounts drained. You think you have stress now, it could be far worse. Don’t ever say that you’d gladly walk away with nothing just to get out and certainly do not simply walk away.
It may feel freeing to step out of a stressful partnership. You may even feel noble by asking for nothing but your freedom when you know a business is making money. But that’s where you’d be wrong.
You can, by agreement, accept nothing and walk away from your stake in a business. And there is a time when that is a right action to take. However, that should be done through a negotiated agreement that also frees you from all liability present and future. That business partner you strongly dislike could stop paying taxes after you leave the business. Then what? They come after you. What if that partner dies? You may still be a partner of record. Never just walk away.
And what if things are so bad that you can’t stand another day working with a bad business partner? Too bad. You still have responsibilities. You also have rights.
If a partner is violating the state’s business code or Federal law, you can take action to protect yourself from liability by reporting violations and seeking help from the law. Granted, that can be a lengthy and messy process but remember that the goal is to protect you from future liability.
So what if things are really that bad? What should you do?
You start by getting someone else in the ring with you. That person can be an attorney, a mediator, or a business counselor. I like to talk through a problem and reach a peaceful agreement before having to take a situation into court. Unless there are serious criminal acts involved, an agreement can usually be reached. Even if you plan to take your partner to court, you can save a lot of money by having someone experienced help you prepare your case.
You do have rights. You don’t have a right to sell your interests unless specified in your documents but you do have a right to ethical treatment and your partner has a fiduciary responsibility to the business which legally enforceable. So don’t act in haste or frustration.
When you’ve reached your breaking point, get help. Step 1 is to gather all of your case into a coherent package. Then solutions can be proposed to your partner. If you must use the courts to fight it out, at least you will have all the documentation properly organized.
If your partnership is in critical condition, give me a call. I can get you going in the right direction.
Chris Reich, TeachU