partnership law

[the giver]

I have a partnership in a an auto body business in Delaware. One of the general partners picked up mand left in the middle of the night and took with him belongings of the business, including the company bank account. He left a phone message indicating that he wants to be bought out of the partnership.

The partner changed the locks on the building and is working on having his name removed from the lease of the premises. He also would want to change the business license to read his name only. Can he do this? Can he simply assume that the partner has abandoned the partnership? What fiduciary obligations does he still owe?

 

[Tracey]

How many partners are there? Partner A can't take the bank account & some equipment to force you to buy him out. Sue him immediately (breach of fiduciary duty, conversion of p'ship property, intentional interference with business prospects, etc.) before he can spend all the money. Request a temporary restraining order requiring him to return the money & equipment, or at least put them into an escrow account.

Which partner changed the locks? A or B? If it was B, then you have the sticky question of whether B is still in partnership with you or whether the entire p'ship dissolved. At any rate, B cannot grab the lease & business name. Those are p'ship assets and have to be sold/divided by the winding up partner. Get a TRO against B to prevent him from changing the lease, changing the business name, and requiring him to give you a key to the new locks.

This is a very complicated situation. You need to take all the facts & any written p'ship agreement to a corporate lawyer today and fire off the TROs ro maintain the status quo until a court can settle things. You might move for receivership or ask to be made the winding up partner.

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.

 

[the giver]

I'm sorry, the partner who changed the locks (we'll call him A), was the partner who was stolen from. He was afraid that the other partner, (partner B) would take more partnership assets.

In partner B breaching his fiduciary duty in taking the bank account and partnership assets, will he still be entitled to a remaining portion of the partnership assets?

Would it be wise for partner A just to assume the partnership dissolved and proceed under a new business name with a new license, under a new building lease without partner B's name on it?

The Good-will of the business is what partner A really is interested in, (since he built it primarily himself). Partner B has been a huge problem for a while, very dishonest and cunning.

The real issue A worries about in taking this path is if the business all of the sudden begins to reap large profits, if partner B will attempt to say that they are still in a partnership relationship.

I would think that if partner B decided to sue for more of the partnership assets that he would be looked down upon by the court for breaching his obligation in embezzling company assets.

[This message has been edited by the giver (edited June 19, 2000).]

[This message has been edited by the giver (edited June 19, 2000).]