Successful business destroyed by dispute without regard to protection of business – Second Opinion Sought

29/11/2017

On many occasions couples have run a successful business together over a period of many years and thereafter their personal relationship breaks down.  It is a difficult time especially when both parties have invested many hours of work in the business to achieve the success that it has.

There are many emotions when faced with this scenario including regret, anger, relief and concern for your future.

The issues that arise and that are unavoidable include financial issues and concern as to how you are going to survive or continue with a lifestyle to which you are accustomed or which you would desire.

The fundamental facts of one case in which we recently provided a second opinion to the Husband were:

1.        Husband and wife married for a considerable time and then separated.

2.        Husband and wife had a very successful small business as a result of which each of them enjoyed a high standard of living; apparently in the later years without a great personal involvement.

3.        The business employed an excellent general manager and the Husband was the primary manager of the business.

4.        Following separation the husband and wife had fought about everything from the knives and forks to who drives the Porsche, Mercedes, Maserati with the Lawyer assisting the fight.

5.        The Wife made an Application to the Court that she would manage the business to the exclusion of the Husband.

6.        Based on the history the company could afford that distribution.  This was opposed by the Husband.

7.        The Wife made an Application that a significant monthly sum be paid to her from the business.

8.        The Court considered the matter and indicated that the Court would appoint a Receiver to the business rather than let the Husband or the Wife manage the business to the exclusion of the other.

9.        Even though the Court gave the indication that a Receiver would be appointed to the business, the Wife pressed on with her application that the Husband be excluded from the business, without consideration of what was to happen upon the appointment of a Receiver.

10.      Receivers and their employees charge hourly rates for everything they do in a business.  Receivers are not familiar with the particular business; the customers, the relationships etc.  A Receiver to any business is likely to be detrimental to the business and in our view should be a last resort by owners of the business.

11.      One would have thought that the indication by the Court of the appointment of a Receiver would have jolted the parties and their Lawyers to try and take action to resolve the matter or at least conduct of the business without the appointment of a Receiver.

12.      This did not happen and the Receiver was appointment to a business which had produced a high income for the parties.

13.      After less than one year regular payments to the parties had stopped and the Receiver indicated that the business could not pay its debts.  There has been a great loss of employees (including the general manager) from the business, the cars have been returned to the financiers, and the value of the business had been significantly reduced.

We are instructed by the Husband in an effort to try and resolve the issues.

Lawyers who have been practicing for many years do not necessarily gain the experience to stop these results where the asset pool is reduced sometimes, to devastating effect.

If you have been running a successful business with your partner and your relationship has broken down and financial settlement between the two of you is now on the cards, we recommended that you seek timely legal advice so as to achieve the best possible financial outcome for you and your family and avoid the possibility of financial hardship which could have been averted.

Careful consideration should be given and the questions asked: What are the benefits and detriments of particular courses of action? Is it worthwhile and is there a better way of achieving a financial settlement?

Please do not hesitate to contact Richard Watson, our experienced family law Solicitor or Shereen Da Gloria his assistant to discuss your concerns.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.

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