
Christopher D. Warren
Partner
212-390-8060 cwarren@sh-law.comFirm Insights
Author: Christopher D. Warren
Date: August 28, 2024
Partner
212-390-8060 cwarren@sh-law.comIf you don’t correctly and completely dissolve your partnership, you could face liability long after your business closes its doors. Even when all partners agree to end the partnership, there are still numerous legal issues that must be addressed, from terminating contracts to distributing assets. Disagreements between partners can make the process even more challenging.
In either case, understanding how to dissolve a partnership is imperative to getting it done right and avoiding unnecessary legal headaches. This article will help you get started on the right path; however, it is always a good idea to work with an experienced business attorney who can guide you through the process.
Partners may want to dissolve their partnership for a variety of reasons. Examples include disagreements between partners over finances or strategy, as well as the death, incapacity, or retirement of a partner. Sometimes, partners may simply be ready to move on to new ventures.
While every partnership situation is different, dissolution generally involves the following steps:
We are often asked, “Can one partner dissolve a partnership?” Generally speaking, one partner can end a business partnership. As in other cases, the dissolution is governed by the terms of the partnership agreement or operating agreement. For example, your partnership agreement may contain a buy-sell provision that allows you to exit the partnership by selling your interest to your partner(s). It may also include provisions outlining when one partner (generally a partner holding a majority interest) can unilaterally decide to dissolve the partnership.
In the absence of an agreement addressing whether one partner can dissolve the partnership, state law controls. For instance, both New York and New Jersey have laws in place that authorize judicial dissolution. Under the New Jersey Uniform Partnership Act, any partner (even if there is no partnership agreement) to file an application in the courts to dissolve the partnership. Given the complex legal issues involved and the risk of protracted litigation, it is advisable to work with an experienced partnership lawyer who can protect your interest.
Partnership dissolution can be a complex and time-consuming process. Our partnership attorneys understand how to dissolve a partnership properly, while also shielding our clients from liability and preserving their assets. When faced with a partnership dispute, we can also help clients reach an amicable solution that allows both sides to move forward.
The attorneys of Scarinci Hollenbeck’s Partnerships Practice Group provide experienced counsel to New York and New Jersey partnerships of all sizes in a wide variety of industries. Whether you are looking to form, grow, or dissolve your partnership, our team develops a comprehensive strategy that advances both your business and legal interests.
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