After some advice if possible although I accept that professional legal advice would need to be sought. Just trying to get an idea as I know in law what you might think is the process is rarely actually the case!
My wife and friend set up a business around last October. Things were going well as a mobile service and they’d hit capacity issues so they decided to open up a fixed premises to operate from. The mobile operation was initially funded by my wife who invested just over £6k. Around March this year my wife then invested a further £4.5k and they each took out a personal loan for £8.5k to help fit out the unit and give them a buffer to cover overheads.
They finally opened last Tuesday after many months of hard work and things seemed to be going well (apart from having overspent in kitting out the unit). Until yesterday when her friend decided she’s had enough and wants to walk away, queue some arguments between them as it all came out of the blue and as such they’re not particularly on speaking terms at the moment.
This leaves us in the current position. My wifes not particularly sure if she can continue the business on her own and due to financial constraints is unable to fund any staff to cover the workload. There is bugger all money left in the current account (probably around £2k at the moment) and not much in the way of sellable assets. Most of the kit out was structural/building related. All they have is a van which my wife initially bought and is registered to her individually and some small sundry items which would probably be worth around £1k in total.
From a legal standpoint could anyone clarify the various options available under the following possibilities.
1 – The wife decides she can’t continue as a business and they have to close down. As far as I can tell they have a 50/50 share agreement (they formed a limited company) with my wife having “A” shares and her friend having “B” shares. As such I figure that any realisable assets would be sold and split 50/50 regardless of the capital which was introduced. Is this right?
2 – The wife can get help from family/friends to cover the workload for a couple months whilst their customer base expands and allows her to recruit staff on a permanent basis. From this point she would need to transfer the shares her friend owns to herself. What realistically could her friend claim as to the value of her shares. Obviously the last thing we’d want would be for us to struggle and put the work in to make the business successful only for her friend to wave her shares agreement and reap the rewards. However on the other hand we’re not particularly in a position to offer much of a payoff let alone the solicitors fees as most of our money has been poured into the business.
Any advice would be gratefully received. Obviously the advice of choosing a business partner more carefully is obvious!
My wife and friend set up a business around last October. Things were going well as a mobile service and they’d hit capacity issues so they decided to open up a fixed premises to operate from. The mobile operation was initially funded by my wife who invested just over £6k. Around March this year my wife then invested a further £4.5k and they each took out a personal loan for £8.5k to help fit out the unit and give them a buffer to cover overheads.
They finally opened last Tuesday after many months of hard work and things seemed to be going well (apart from having overspent in kitting out the unit). Until yesterday when her friend decided she’s had enough and wants to walk away, queue some arguments between them as it all came out of the blue and as such they’re not particularly on speaking terms at the moment.
This leaves us in the current position. My wifes not particularly sure if she can continue the business on her own and due to financial constraints is unable to fund any staff to cover the workload. There is bugger all money left in the current account (probably around £2k at the moment) and not much in the way of sellable assets. Most of the kit out was structural/building related. All they have is a van which my wife initially bought and is registered to her individually and some small sundry items which would probably be worth around £1k in total.
From a legal standpoint could anyone clarify the various options available under the following possibilities.
1 – The wife decides she can’t continue as a business and they have to close down. As far as I can tell they have a 50/50 share agreement (they formed a limited company) with my wife having “A” shares and her friend having “B” shares. As such I figure that any realisable assets would be sold and split 50/50 regardless of the capital which was introduced. Is this right?
2 – The wife can get help from family/friends to cover the workload for a couple months whilst their customer base expands and allows her to recruit staff on a permanent basis. From this point she would need to transfer the shares her friend owns to herself. What realistically could her friend claim as to the value of her shares. Obviously the last thing we’d want would be for us to struggle and put the work in to make the business successful only for her friend to wave her shares agreement and reap the rewards. However on the other hand we’re not particularly in a position to offer much of a payoff let alone the solicitors fees as most of our money has been poured into the business.
Any advice would be gratefully received. Obviously the advice of choosing a business partner more carefully is obvious!
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