Many closely held businesses in the New York City area are owned by members of the same family or friends who have known each other for a long time.
It is a hard fact of life that even when owners are related, conflict between them can tear a closely held business apart.
Sometimes it will be necessary for one or more of the business’s owners to unwind their affairs, dissolve the existing business and part ways with their organization.
A business owner may have to resort to litigation to extract themselves
Because of the emotions and relationship surrounding this decision, the term business divorce is particularly appropriate to these sorts of situations.
As is the case with a family divorce, someone who wants out of a business which is no longer serving their interest may have to go to court in order to protect their legal rights.
Usually, a business’ organization documents, such as a partnership agreement, will cover what happens in the event of a dissolution. Additionally, New York law also may apply, especially if no agreement addresses a particular issue.
The laws governing business breakups are a little different when it comes to closely held organizations. For example, the business owners may have additional obligations to the others which they would not have in a larger corporation.
Owners will need to understand all of their legal options when leaving
An owner who wants to separate from their closely held business will want to make sure that their legal rights are protected and that they understand all of their available options.
After all, the outcome of a business dissolution can affect an owner’s finances and future opportunities profoundly. Dissolutions may also have other legal and tax consequences which New Yorkers will need to be aware of.