The Darker Side of Partnership Dissolutions


The breakup of a business partnership can be very much like a divorce; the parties involved have shared business assets and interests that need to be divided and distributed. Like divorce, the process of partnership dissolution can be carried out amicably, or things can get ugly very quickly. Disputes over business asset division, liability for business debt, the right to keep certain client accounts and other aspects of the split can easily result in lawsuits between business partners or ex-business partners.

One example of this type of partnership dispute was recently featured in the South Florida Business Journal. The article told the story of a "bitter breakup" of Bitner Goodman, which is one of South Florida's largest public relations firms. One of the partners filed a lawsuit against the other partner (now his former partner) for allegedly "looting" the company's assets as part of his act of leaving the partnership and starting a new firm of his own. The lawsuit was also filed against two former Bitner Goodman employees who allegedly assisted with the so-called looting and who joined the newly formed PR firm.

The defendants are accused of taking computers, accounting records, client files, phones, appliances and even some of the remaining partner's personal items. It is alleged that the defendants took the items on the evening of Wednesday, June 11 over a span of about five hours. It is also alleged that the partner who left shut down the firm's website and its social media accounts, and also that he refused to return the accounting records that were needed to keep the firm's financial operations in order. Some of the allegations that are included in the lawsuit include improper conversion of property, civil conspiracy, tortious interference with business relationships and breach of fiduciary duty.

According to the South Florida Business Journal article, the plaintiff is making several defenses to these claims. He has stated that as an owner of 50% of the firm, he had a right to take certain items; that he did not put the former partner in a situation where he could not operate the business; that he actually did offer to hand over the records that his former partner needed; that he offered to sell certain items and split the profits, etc.

The Importance of a Well-Drafted Partnership Agreement

When dissolving a partnership, the goal is to avoid damaging situations such as the one described above. Partnership dissolutions are usually best carried out when the business professionals' partnership agreement includes clear protocols concerning how the dissolution should be carried out. A properly executed partnership dissolution will ensure that neither party can enter into a business contract or transaction on the other party's behalf after they end their business relationship. It will also allow the parties to exit the partnership with their appropriate share of the businesses' assets and liabilities. When two or more business partners cannot execute a partnership dissolution through an agreement or through negotiation, it may be necessary to handle the dispute through business litigation.

If you are preparing to dissolve your business partnership, you can receive the high-quality legal guidance you need from my law firm, Gregg H. Glickstein, P.A. I am a Palm Beach County business litigation lawyer who has nearly 35 years of experience on my side. Contact my firm so I can help you protect your interests! I serve clients throughout Palm Beach and Broward counties, and I offer free case evaluations.

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