Legal Question in Business Law in New York

Need to Understand Partnership Rights/Disbursement

2yrs ago my husband was finally granted partnership (30%)of 2 small family businesses (S-Corporations). The other partner is his father. Now his father is going through a divorce and his wife (husband's mom)is contesting the partnership. His father claims she can't do that. The reality is we don't know who to trust or what course of action we need to take. Especially since his father plans on refinancing the business to pay her off which means my husband would be sharing the debt on his father's behalf...1. I don't know if his father can do that and 2. if so, then I suspect we'll need to negotiate my husband's share? Bottom line is we need to understand what are the implications if his father uses the business to pay her off. The divorce is slated to go to trial at the end of Aug if no agreement is met. Again, we can't trust his parents because his dad says don't worry and his mom says we should legal counsel.

Any advice will be greatly appreciated!


Asked on 8/01/06, 1:28 pm

1 Answer from Attorneys
Meyer Silber The Silber Law Firm, LLC

Re: Need to Understand Partnership Rights/Disbursement

Sounds messy and before you and your husband agree to do anything, he should sit down with an attorney.

If the corporation takes out a loan, it has to repay it. That means that instead of profits going into your pocket, it goes to a bank or lending institution. In addition, many banks require personal guaranties for loans made to small corporations. If that is the case, your husband can become personally liable to repay the amount refinanced.

As far as attacking the agreement between your husband and his father, so long as the interest was given to your husband in good faith, it should be immune to attack, although dividing property held in marriage can become messy. Feel free to contact me to discuss this further.

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Answered on 8/01/06, 1:37 pm


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