Help!! How to leave a limited partnership???

pinkypink411

Hello all,

Please help!! 8 months ago my self and my business partner decided to set up a consultancy company. We started up as a limited company, had a 50/50 partnership agreement etc.... I have only taken one small payment in this period, she however has taken 9 times as much as me. I now need to go get a full time job as we aren't getting on too well, (she transferred one of the retainers into her personal bank account :mad: ) and i need to earn some money!!! However, in the next couple of months we will be getting paid for a couple of orders.....

It states in our partnership agreement that i need to give 6 months notice, she also wants me to say to our accountant that it was me who withdrew the money out of our account?? i am ot willing to say this as i think i am entitled to the same renumeration as she has had? I also do not know how to go about this ending of the partnership, if she wants me to leave the company now, what am i entitled to?? I have got myself into a fair amount of debt in this period.

I am concerned that she will get the names changed on the payments to put into her personal account therfore i would not be entitled to half, and as we are acting as a third party on these orders (ie, introduced the end user to the manufacturer, the end user pays the manufacturer direct and the manufacturer pays us a proportion) how would this affect me??

I would be grateful for any advice!!

Thanks alot!! :A

Savvy_Sue

1. What does your partnership agreement say?

2. I'm wondering if you need legal advice if you think your partner is in breach of it?

PS Welcome to the boards, sorry it's a pickle you're posting with!

ukbill69

Sell your shares to the other partner, if he dont want them then put a ebay auction up for £1 buy it now.

pinkypink411

Thanks.

I have just spoken to her, and told her that i am thinking of leaving, she said "well, as there is no money in our company at the moment" (well not much anyway) she "will probably just start up a new company on her own!!" (and take all the order payments with her!!) I have emails from her with details of these orders etc, and our partnership agreement states that we cannot leave and work with direct competition within a year of leaving the company.

As we do not have purchase orders in our company name etc can she just start up and take this business with her? DOes anybody know if i am entitled to the same amount of money she has already withdrawn from the company. She is in breech of contract over a few items!!!

skippy64

See a Lawyer/solicitor straight away with all your partnership documentation. At the very least if you go for a free initial consultation they would be able to put you in contact with someone who specialises in company partnerships/limited companies who could answer your concerns.
It all sounds very messy & an unpleasant situation at the moment. I hope you can resolve the matter with your business partner and possibly continue working together in your business coz you give the impression that you have the work there to both go at, its just how the monies are at the moment thats giving you the probs.

pinkypink411

i think legal advice might be necessary, we have just spoken and she does not seem to think that i am entitled to anything!! She said that there is not enough money in the company to pay me, so we should dissolve the company??! what is my legal position on this?? if we do that do i lose any entitlement to the orders we are awaiting??

The partnership agreement and all legal docs state that i am a 50/50 partner, and that we cannot work in direct competition to the company for a year if we leave the company, but i son't know how this is affected if the company is dissolved!!

She seems to have the opinion that i will just be walking away, regardless of the money i have lost!!

This whole episode is very frustrating! Just wish i could turn back time!! is that possible?? ha ha!

Debt_Free_Chick

pinkypink411 wrote:

i think legal advice might be necessary, we have just spoken and she does not seem to think that i am entitled to anything!! She said that there is not enough money in the company to pay me, so we should dissolve the company??! what is my legal position on this?? if we do that do i lose any entitlement to the orders we are awaiting??

I wonder what she means by no money in the company. The money in the bank account is irrelevant ... you need the P&L for the period to date. Also, you need to take into account what she has drawn (personally) over that period. Who does the accounts? Do you prepare (internal) management accounts? Do you have an accountant?

The partnership agreement and all legal docs state that i am a 50/50 partner, and that we cannot work in direct competition to the company for a year if we leave the company, but i son't know how this is affected if the company is dissolved!!

It seems to me that if the company is dissolve, then there is no company to be indirect competition with Also, these clauses are known to be a bit iffy in Court ... as you cannot be denied the opportunity to earn a living. So they would usually have an exclusion zone e.g. not in direct competition within 5 miles. I wouldn't worry too much about this issues, at the moment.

She seems to have the opinion that i will just be walking away, regardless of the money i have lost!!

This whole episode is very frustrating! Just wish i could turn back time!! is that possible?? ha ha!

Well, the good news is you have an agreement. That should cover all you are owed so far and what happens to any profit in the company.

But you need advice

pinkypink411

As an update, just had a load of abuse from my business partner, at the mention of me getting any form of renumeration!! Eventually she agreed to paying my what she has already drawn from the company, which is more than me, but is saying that I am not entitled to the outstanding orders which are due to us as she was the one who got these orders! I am concerned that although i have copies of these purchase orders, (we are acting as a consultancy and therfore they are written to the manufacturer and not us, however i have copies of emails discussing this with both the end user and manufacturer) she will get the payments paid directly to her, or some other way so that i won't see them in the account.

I know i should probably see a solicitor, but i'd rather it not get messy, and its not as though its 10000s. It interesting how people change when there is money involved.

When i mentioned a solicitor to her, she said "they would want you to prove that you bought income into the company" which technically i haven;t as my role has been more administration, and bearing in mind she has 20 years more experience than my 8 months, it was always going to be the case that she would have more contacts etc.

Do you think i should just take the money approx or hold out for more approx 3times as much???

What would be my chances of getting money out of her of she is refuses to pay??

bridiej

Personally I'd take legal advice, or at least ring the Citizens Advice Bureau - OK it may not be £1,000s we're talking but you should get all you are entitled too.

No one like getting solicitors involved but at the end of the day, sometimes you just have to bite the bullet.

pinkypink411

Another update.....

I spoke to my rude and arrogant Accountant this morning, who has obviously decided that he has more chance of getting business from my business partner in the future instead of me! and i have decided that perhaps i should just wash my hands with everything, walk away and put this ine doen to bad experience!!

He seems to think that (despite me having more of an administrative role) we are only entitled to what we have put into the account! Yeh right!! i have have a partnership agreement which proves that wrong!

Anyway.....i think i even if i go to a solicitor, the chances of her ever paying me the money i am due are slim as i am certain she will find some way of delaying the whole situation, which would probably result in months of stress and masses of solicitors fees.

Do you think i should just walk away????

skippy64

Please think of the longer term financial liablities for you personally even if you do 'walk away' now. Make sure you know exactly where you stand over any taxation that the company owes or is to be owed to HMRC next time round. It would be wise for you to seek the services of an accountant for yourself personally to go through all financial implications at this stage.
The last thing you want to find out is your business partner has not made any tax provisions for either of you within the company. You sound like you are now realising that you need to think long term now for your own career and that it may be best to either set up by yourself or seek employment.
LOOK AFTER NUMBER ONE !!!!