Legal Question in Business Law in Illinois

Re: Desolving A Partnership

Your partnership is governed by Illinois' Uniform Partnership Act (the "Act"). This Act controls where there exists no partnership agreement. (I have personal experience with this Act and, more particularly, its related act concerning limited liability companies from the dissolution of a former law firm in which I was a member.)

If you cannot reach mutual agreement, the partnership is "dissolved" upon the withdrawal of either partner from the partnership. The Act specifies what steps are necessary in dissolution; i.e., collection of receivables, payment to creditors, sale of assets, etc. (As far as the sale of assets goes, you may be entitled to purchase such assets at fair market value.)

Ultimately, if you two cannot agree on a buyout price, the court will intervene -- upon application of one of the two of you -- and will, after receiving evidence, determine the value & the appropriate split, etc.

-- Kenneth J. Ashman; [email protected]; www.lawyers.com/alo

Re: Desolving A Partnership

Yes, from the information you provided it seems clear that your partner could attempt to sell his interest in the business on the open market. But, what exactly would he be selling? Are you using an expert to put a value on the business for the purpose of submitting your buy-out proposal? Will you be able to refinance in your own name so as to remove your ex-partner from liability on the debt? What are the tax consequences of your proposed buy-out? Will your ex-partner be free to open a business in competition with yours after the transaction? How will the ex-partner be protected from liabilities to third parties incurred during the partnership? These are only examples of the many considerations involved.

If you are not sucessful in reaching a complete buy-out agreement, you may be faced with the alternative of selling the entire business to a third party and dividing the proceeds.I would suggest that an attorney would be valuable to you in this situation. If you are not already represented by legal counsel you may call me for a free telephone consultation at 314-727-2822.