Dissolution of Partnership or Business

Dissolution of Partnership or Business

The Sacramento Business Attorneys at Eason & Tambornini are experienced in handling dissolution of partnership or business matters. While many dissolution matters arise from fraud and misrepresentation or a breach of contract, sometimes even the best business relationships need to come to an end. The mechanics of a dissolution of partnership or business vary depending upon the form of the business: joint venture; general partnership; limited partnership; limited liability company; or corporation.

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The rights of a business owner can also vary dramatically depending upon whether there was a written ownership agreement; whether a business owner resigned or was ousted; the percentage share of ownership; and whether the remaining owner(s) continue operating the business after disassociation of an owner. A business dissolution or disassociation of ownership interest can be very emotional, and because of those emotions, hiring a good Sacramento Business Attorney to keep you focused is important.

In addition to analyzing your legal rights in a business dissolution case, it may be even more important to analyze the practical implications as well. To avoid the proverbial killing of the goose that laid the golden egg, it is important to plan carefully and weigh the potential impacts of aggressive enforcement. Most business value is based on the business as an on-going concern and not based on liquidation. While the right to liquidation of the business assets may in fact be a remedy in a dissolution action, it is usually better to find a way to keep the business going.

Fortunately, the California Corporations Code has many provisions that can provide assistance to business owners in dissociation cases. Understanding these provisions, as well as analyzing how those rights may have been reduced or expanded by business ownership agreements, is particularly important.

A common example of business dissolution is an action to involuntarily dissolve and wind up a California limited liability company.  Under California law, if the business no longer able to carry on pursuant to the operating agreement, it may be dissolved.  Likewise, if dissolution is needed to protect the rights or interests of any of the members, a member may bring an action to dissolve.   Probably the most common reason for an involuntary dissolution is when there has been internal dissension such that the company has become deadlocked in decision making.

In an action for involuntary dissolution of a limited liability company in California, the court typically appoints a member of the limited liability company to liquidate the assets.  However, if a non-consenting member wants to buy out the other members, the court will regularly allow that to happen based on the fair market value.  Determining the fair market value of the business is one of the most significant battles in an action for dissolution.  Besides agreeing on a value, there is often even a dispute as to what date the valuation should be based.  The court may be required to decide if the valuation date should be the date of a wrongful act of a member, the date of the filing the complaint for dissolution, or another date that may be more equitable for the parties.

The Sacramento Business Attorneys at Eason & Tambornini would be happy to meet with you to provide guidance on how to efficiently and effectively dissolve your business relationship, or obtain your rights in a dissolution of partnership or business.

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