Newspaper article The Journal (Newcastle, England)

Business Plan Should Include Break Up of Relationships; Legal Clinic in Association with RBS

Newspaper article The Journal (Newcastle, England)

Business Plan Should Include Break Up of Relationships; Legal Clinic in Association with RBS

Article excerpt

THE Buzz the word at the moment in business is risk assessment, we all do it, but how many of us factor in domestic breakdown and potential impact on the business.

The classic example of this type of situation is when one party to the marriage is providing the majority of the capital and income to the family unit via a business interest, whether it be as a director of a company, a partnership or sole trader.

How do you protect that from financial claims from the other spouse within divorce proceedings that would potentially put the business in financial jeopardy?

The situation is often compounded - there may be a history of involvement in the business by the other spouse, there may be current involvement in the business, they could be a director, they can be an employee.

The divorce lawyer must adopt a commercial approach, the lawyer needs to know about the business, what it does, how it operates, the history of the business, everything. The business accountant will be seen as partisan but can be a really good source of information and you can cut through the issues very quickly by meeting up with the business accountant and fully understanding the position the business is in.

If the parties cannot reach an agreement and the court becomes involved, the court will appoint a jointly instructed expert to provide information about the business interest, possibly including valuation.

The arguments usually centre on how much money can be raised by way of settlement or whether the business can be in some way split in two without financial detriment. The latter is not an easy option. I have cases where we have managed to sustain the jointly run business beyond the divorce. This is far from unheard of, there are some famous business couples, example Nicky Clarke hairdresser and his ex-wife Lesley and Russell Simmons and Kimora Lee who have managed to do this. …

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