There are many reasons why businesses go south. When they do, business partners may not know what to do or even agree on the next steps. If you find yourself in such a case, you may need to explore partition actions. First, however, you’ll need to understand what they are and how they work.
What is a partition action?
A partition action is a legal proceeding that allows a business co-owner to force the sale of the business or its assets. This type of action is often used to break up a business partnership when the parties involved can’t come to an agreement.
How does a partition action work?
A partition action begins with the filing of a petition in court. The petitioner must then prove that there is an ownership dispute and that a sale would be in the best interests of all parties involved.
If the court decides to go forward with the sale, it will appoint a referee to oversee the process. The referee then has to work with all parties to identify and appraise the business’ assets and develop a timeline for the sale.
How can you increase your chances of success?
First, you need to ensure that you’re organized. Make copies of all the documents that might be relevant, including contracts and any other documentation that proves your ownership interest. You should also be aware of what your state’s laws require in terms of evidence to support a successful partition action.
Secondly, you need to ensure that you cover your bases with the other co-owners with regards to agreements that were in place when the business started. Thirdly, you need to be patient. While the process cannot take forever, it can certainly seem like an eternity when you’re in the middle of a dispute.
What can you expect if the action is successful?
If the partition action is successful, you can expect to receive payment for your ownership interest in the business. The sale will then be finalized and the proceeds distributed among the owners according to their interests.
If you are considering a partition action, it is important that you know what to expect. This process can be complicated and time-consuming, so prepare carefully and have a clear understanding of your goals.
