After devoting endless resources and time into forming and operating a partnership, dissolving it can be emotional and stressful. Sometimes partners disagree, or other times they may find it is time to retire, or leave for personal reasons. If you and your partner have come to an agreement that it is necessary to dissolve your partnership, it is important to get your legal affairs in order.
First, consider whether dissolving the partnership is your only option. Sometimes, you may be able to restructure the partnership so that the partner who wishes to leave will have less control and responsibility. You may also be able to sell your partner’s share to continue operating the business. Review the Partnership Agreement drafted during the formation of the partnership to determine what dissolution options you may have. Absent dissolution provisions in the agreement, a partnership may be dissolved by majority vote.
If you find that dissolution is the only option, and the partners have agreed, the process of winding up can begin. New York State imposes a 90 day period to settle business affairs. During this time, it is crucial to determine whether all the partners have completed their business obligations. Any contracts, loans, civil lawsuits, or agreements should be reviewed. Additionally, any remaining assets should be distributed to the partners at this time.
Under New York State law, it is necessary to file a Certificate of Dissolution during wind-up which includes:
• The exact name of the business
• The date the partnership was formed
• The reasons for dissolution
It is also encouraged by the New York Department of Taxation and Finance to file any tax returns during wind-up.
When you are in the process of dissolving a partnership, it is best to consult with an experienced business attorney who can ensure that you are legally protected. Call Bellavia, Blatt & Crossett, P.C. at (516) 873-3000 or (631) 224-7000.