In September of this year, the former New York landlord of the now-defunct law firm Dewey & LeBoeuf LLP, initiated a legal action against 450 of the firm's former partners. The landlord, 1301 Properties Owner, is suing for debts owed under their lease following the firm's collapse in May 2012. The former legal giant was headquartered on Manhattan's Avenue of the Americas with a lease set to run until 2020.
The partners of Dewey & LeBoeuf LLP benefitted from the legal protections a limited liability partnership affords that are not automatically available to partners in a general business partnership. When proper legal arrangements have not been made to deal with partner liability matters and other key issues, dissolving a general partnership can result in bitter disputes. These hostilities should be avoided to prevent collateral damage to any brand names associated with the partnership.
If you are contemplating the dissolution of your business partnership, consider the following issues:
- Dissolution formalities - Complete the official paperwork to ensure the partnership is formally dissolved. This involves filing relevant documents with state authorities and publishing notices to inform the public of the partnership's dissolution. This is crucial, since a partnership structure allows one partner to transact in the partnership's name without informing the others while the partnership is still intact.
- Managing debts - Partners must reach a formal agreement regarding the payment of outstanding debts. Absent these arrangements, partners who have paid their share of the debt may find themselves being chased by creditors for debts that other partners have failed to pay.
- Control of the business and brand names - Once you have considered who retains ownership of the company name and who keeps control of the business, arrange for legal documents to be drafted to reflect this division. When one partner is buying the other one out, this process is more straightforward.
To ensure the dissolution process is handled swiftly and smoothly, consider hiring an experienced Minnesota business attorney. In addition to preparing all the necessary paperwork, your attorney can advise you on any issues arising in the context of an amicable dissolution or provide you with robust representation in the event of a hostile split.