by A.W. Berry

Created on: January 15, 2008   Last Updated: April 15, 2011

Business partnerships involve two or more persons who are owners and in many cases officers of a company. This type of business relationship usually requires significant joint responsibility and collaboration on behalf of the partners for the partnership to succeed. When a partnership is broken it is called dissolution of partnership and the reasons and method for obtaining such dissolution are several.

Dissolution of partnership:

A dissolution of business partnership can be caused by conflicts or irreparable differences between one or more of the partners. Additionally, an unsuccessful partnership may influence a partner's decision to leave along with a host of other possible reasons such as health, other commitments, passing away, loss of interest, dispute etc.

Disputing dissolution:

Dissolution of partnerships can be contested in a court that has jurisdiction over the geographic area in which the business is registered and/or operated. Generally a court ordered dissolution takes place when an out of court settlement can't be reached. In such cases the judge will review the the positions of the partner(s) seeking dissolution and make a judgment based on his or her hearing of the case and review of the appropriate law. Judges may order a dissolution through appeal to a number of legitimate causes such as infraction of business terms of agreement, mental incapacity, or failure of a partner to comply with financial obligations within the partnership.

Ending business partnerships out of court:

Most partnership laws within the United States require certain actions to be taken before a partnership is considered ended. Since partnerships are not incredibly formal types of businesses, the amount of paperwork that needs to be filed can be minimal if the ending of the partnership, and its terms are agreed upon by the partners without lawsuit. The required actions are as follows:

1. Give proper public and governmental notice as required by law
2. Pay all creditors what they are owed
3. Return Capital investments as originally invested by the partners
4. Distribute remaining assets and profits evenly among partners

The above steps may be more difficult than they sound especially if one partner goes bankrupt and leaves the remaining partner(s) with all the debt. For example, even though all partners are equally liable for debt in a partnership, a partner with no assets can't pay what isn't there after a bankruptcy

Tips to consider before ending a partnership:

• Partnership

• 1
• 2
• Next Page >>