How to Properly Dissolve a Business Partnership in Arizona
Business partnerships can end for a variety of reasons. This can be the result of disagreements on the future of the partnership or business. Other times, the business partnership simply runs its course and there is no longer a reason to be in a partnership. Good planning when forming the company and a solid operating agreement can make the dissolution process easier on all parties, but it does not mean you should assume that everything will go as planned.
Emotions can quickly get in the way when you are ending a partnership or closing a business. If you want to properly dissolve a business partnership in Arizona, you should stay focused on the things that are required under the law. It generally does not help the process to assign blame to anyone. Stay focused on the necessary steps to resolve any disputes and dissolve the partnership legally. Before you start the process, you want to find an experienced attorney in Arizona. At MacQueen & Gottlieb, we understand the necessary steps of dissolving a business and can represent your legal interests throughout the entire process so you can properly dissolve a business partnership in Arizona.
Review Partnership Agreement
The first step to dissolving a partnership is to complete a thorough review of the partnership agreement. Our firm will be able to review your agreement and explain your options for dissolving the partnership. Depending on your agreement, this might mean that you will be required to give some concessions to your partners. This is one of the main reasons you want to work with an attorney that represents your interests when forming a partnership. The partnership agreement will often detail the process for dissolution. Therefore, it is important to have those discussions and engage in the appropriate planning for potential future dissolutions when forming a partnership.
If you do not have a partnership agreement in Arizona, or the agreement does not detail the process for dissolving the partnership, then you will present your case to a judge and will generally be required to conform to the Uniform Partnership Act. Our attorneys can help you understand how this would impact your partnership dissolution, as necessary action under the UPA may vary depending on the structure of the partnership.
Withdrawal of Partners
If one partner is looking to withdraw from the partnership, this does not mean that the business and/or partnership must always be dissolved. If there are more than two partners, and they would like the partnership structure to continue to operate, there is a process for the dissociation of the partner that would like to be removed. This process can involve the other partners purchasing that partners interest in the partnership. Again, the operating agreement may contain dispositive provisions governing such situations. But in the absence of these provisions, the Uniform Partnership Act has applicable terms for this process. At the most simplistic level, you will need to establish the fair market value of the partnership and determine the equity stake of the partnership that is looking to dissociate. This process can be complicated, so you will want to work with experienced attorney if you feel the other partners are not making a fair offer during the dissociation process.
File Dissolution with Arizona Secretary of State
While it is not a legal requirement to file dissolution paperwork with the state of Arizona, you should consider it a highly recommended step if you are able to reach a dissolution agreement without court intervention. This can help prevent future liabilities if one or more of your partners continues to operate the business. The paperwork is simple to file with the state, but our firm is there to make sure that you covered all the necessary details to properly dissolve a partnership in Arizona.
The attorneys at MacQueen & Gottlieb can help you review your partnership agreement or understand how the Uniform Partnership Act may impact the dissolution process if you do not have an agreement in place. Our firm can make sure you complete the necessary steps to get a fair resolution and properly dissolve a business partnership in Arizona. Contact us today to schedule an initial consultation.