Q: I have a business in my name but my partner invested capital. We have now separated and never married. Who legally owns the business?
Sep 02 2009
Answered by: Clive Lewis Ask a question
You may have to take legal advice. Your former partner may claim that the business was a partnership. The outcome will depend upon the facts of the case. Did you both work in the business? If so, how much time did you both spend? What name did the business trade under? Was one partner more identified with the businesses? Did either of you have employment or another business outside the business?
Assuming you can establish that the business was truly yours, your partner is a creditor of the business. What documentation exists about the money they invested? If it was it a loan, what terms and conditions applied? Was there an agreement concerning repayment? Is your former partner now demanding repayment of the whole amount in one payment or do they want to take over the business? You need to consider whether you can afford to repay the amount owing to your former partner – either in full or by instalments (a) from your personal assets or (b) through future cashflow. If this seems unlikely, you might want to think about whether it might be preferable for you to offer to pass them the business for a consideration.
Perhaps the best way forward is to consult a solicitor. Get a fix on the legal position, then see if it is possible to negotiate a deal either directly, through the solicitor or through another intermediary such as an accountant who might be used to arbitrating in commercial disputes.
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