What to Do with an Uncooperative Business Partner

Posted on December 28, 2016 in Disputes

I found a thread of a plaintive (online) cry for help:  “My partner isn’t returning phone calls.  I want to get off the business papers as a responsible party.  I’ve not been active in the business for the last six months/year/two years.  What do I do?”

Unfortunately, to really make sure all those loose ends are tied up, you would need to bring a proceeding to dissolve the business.  This usually involves a petition to the local court where you state the facts of the situation — the business is no longer a going concern, or the partner is no longer around to sign papers, or communication had deteriorated to the point where the business can no longer function properly, etc.  If you’re dissolving the business simply because it’s inactive, some people take the “lazy” way out:  if they have formed an entity such as a corporation or limited liability company, there are some states that automatically dissolve the entity if it fails to pay its annual franchise taxes to the state.  Not the best way to handle it, but it’s a way.

In any event, make absolutely sure that all creditors have been paid and that you have no ongoing obligations with banks or equipment lenders.  If you have a personal guarantee on the loan or lease, they may want full payment of the balance right away.

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