How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Alex J. Your Own Question
Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3756
Experience:  Solicitors 2 years plus PQE
13113900
Type Your Law Question Here...
Alex J. is online now

This summer I started a small outside catering company as an

Customer Question

This summer I started a small outside catering company as an LLP
I am one of two partners and I invested all the capital (@£55K) with a verbal agreement that my partner - the chef - would be paid a salary and that the entirety of the first operating profits up to £27500 would be returned to me as a priority. Once this amount was to be retuned my partner would be assumed to own a 50% stake in the partnership and its assets and that any subsequent profits be enjoyed equally.
The business has recently seen a downturn with rising costs due to a new employee.
On reviewing the situation we have disagreed on how to proceed and because I don't have the necessary technical knowledge to take the business forward... what would be my options in terms of security and legal responsibility to cede the business to my partner and recover my investment? He has few assets and has proposed paying on a monthly basis...
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. How much is he offering to pay on a monthly basis and over how many months? Does the LLP have any assets? Kind regards AJ

Customer: replied 3 years ago.
Hello AJ,
The repayments proposed are £1000 per month for just over 4 years.
The assets are mainly in the form of catering equipment a catering van with wood fired oven and fridges on board. We also have a one year lease on a lock up preparation unit and other equipment there. We have a website and goodwill in our trading name - we set up in June2014 and are turning over about £1500 per week.
Expert:  Alex J. replied 3 years ago.
Hi,
Thank you.
If you are happy to accept this what you need is the following:
1. A deed of retirement agreeing your payout of capital at £48k divided into monthly payments;
2. The deed needs to contain an indemnity from the LLP in favour of you in respect of any liabilities after the date of your retirement;
3. As the payout length is four years anything could potentially happen so you need to consider some security in the form of:
(i) Personal Guarantee from the remaining partner (he may not agree to this); and/or
(ii) A Debenture over the assets of the LLP including catering equipment and good will. At least then if the LLP goes insolvent you have some security.
You will have to accept there is a risk at spreading the payments out over such a long time - this is simply because if the LLP goes bust there may not be money to pay you out what you are owed.
Get a local solicitor to draft the retirement deed and debenture for you (solicitors.lawsociety.org.uk). I would suggest that the retirement deed states that if the LLP misses any installments then the entire remaining balance owed to you will become immediately due and owing - this will be to just keep the pressure on the LLP to pay you every month.
I look forward to hearing from you.
Kind regards
AJ