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Alex J.
Alex J., Solicitor
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My business partner is struggling to raise the 50% to buy me

Customer Question

My business partner is struggling to raise the 50% to buy me out of my share of buildings. He may want just to keep his 50% share. If he cant raise the money can I put the full 100% up for sale on the open market. There is nothing in the partnership agreement we currently have.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,

Thank you for your question and welcome.

My name is AJ and I will assist you.

Does the partnership agreement contain a provision that deals with dissolution of the partnership?

Are there any other partnership assets?

Kind regards

AJ
Customer: replied 2 years ago.

It is a vet practice in which we have sold the bus but retained the buildings which we rent to the new owners.It says in the agreement that the partner is entitled to buy out the retiring partner but nothing about what to do if he cannot raise the finance for the 50%. I think there is something about being able to bid on the open market but can I put the 100% on the market

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

Unless there is an express right for you to market the property yourself, you cannot put the building on the open market without consent or without a court order.

Can you tell me what the agreement says about putting it on the open market?

Kind regards

AJ
Customer: replied 2 years ago.

It says that "if the the remaining partners shall fail to give a purchase notice pursuant to clause 18.1( this is that if the partner retires ,dies or is expelled the remaining partners shall by notice of writing from the date of retirement etc have the option to purchase in the names of the remaining partners) within 3 months of the oprative date the partnership will be wound up and its assets sold within the provisions of the partnership act 1890 provided that each partner shall be at liberty to bid at any sale.

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

It says quite clearly that the assets have to be sold.

Have you got a formal date for the dissolution of the partnership?

The asset cannot be sold until it has been formally dissolved.

Kind regards

AJ
Customer: replied 2 years ago.

No. What do I need to do to get a dissolution od the partnership .I thought once he bought me out it would end as we would have nothing left

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

So has the partner given you a purchase notice?

Also does your partner have any money he could pay you now and could he feasibly afford to pay you in installments for the property?

Under S.32 of the Partnership Act 1890 any partner can dissolve a partnership by giving written notice.

Kind regards

AJ
Customer: replied 2 years ago.

No Everything has been done verbal. He needs to arrange finance We sold the practice 12 months ago and he is not trying to hard. Would it be wise for me to give him wriiten notice that I am dissolving the partnership and tell him that he has 3 months to complete or it goes on the open market

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

Before giving him the dissolution notice I would talk him about the options to keep it amicable.

Regardless of what you do serving a dissolution notice even if you are in the right is likely to cause him to kick up a fuss and you do not want to be caught in protracted negotiations/ court claims.

What you should do is say to him first that he needs to set a deadline very soon for raising finance otherwise you will serve the notice and seek to sell the property.

One alternative is you could sell the property to him for an initial payment and then take security over the property while you are paid the remainder in installment. Obviously pricing would have to reflect that you are not being paid up front.

I look forward to hearing from you.

Kind regards

AJ

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