“Divorce” once referred simply to the end of a marriage, handled only by family law attorneys, in which the husband and wife fought viciously over every last penny. However, due to economic circumstances and partnership discord, more and more businesses are closing up shop or severing the ownership structure. A vast majority of businesses are owned by multiple individuals or entities, making the dissolution process extremely stressful, complex, and difficult. When you wind down your company, you need to take certain legal steps to shut your doors or reorganize. These legal steps are multiplied when you also need to consider the ownership rights and interests of other parties.
Monahan Law Firm concentrates on business divorce. We understand the dynamics of dissolution and have experience with facilitating agreements and negotiations in order to effectively and cleanly end the business relationship. When negotiation is unsuccessful, we will fight for your interests in court in order to preserve and protect your rights. Combining our background in commercial litigation and family law, we are able to help you pursue your goals and work through the complex issues with business partners.
Why Do Business Divorces Occur in Arizona?
Business divorces occur for two main reasons in Arizona: economic hardship and irreconcilable differences. A large number of business ideas fail to translate into success. In addition, many organizations do not have the access to or funds for necessary resources in order to operate at a profit.
In 2007, the economy began winding down as hundreds of thousands of Americans lost their jobs and homes. As such, people were hesitant to make purchases outside of necessities, and countless businesses suffered as a result. During the recession, Arizona businesses were closing their doors for good. While the economy has strengthened recently, purchasing power has remained relatively low as incomes have remained stagnant while cost of living has increased exponentially, resulting in the continued closure of many businesses.
In addition, sometimes companies are economically sound but close due to insurmountable differences among the owners. As an owner, you have a legal right to govern how your company is operated. When there are multiple owners, however, you may butt heads and be unable to compromise. If this occurs, it is often best to dissolve the business and go separate ways.
What Happens During a Business Divorce
There are two main components to a business divorce: (1) dissolving your company according to state law and/or written agreement and (2) properly handling division of assets and debts with your partners and co-owners.
If you are incorporated within Arizona, your shareholders or board of directors must first vote by majority to dissolve the organization. Your articles of incorporation or bylaws will dictate the exact process. Then you must file dissolution forms with the Arizona Corporation Commission. Finally, you must satisfy all taxes owed to the Arizona and federal governments. This generally involves filing a final tax return. The process may differ depending upon the entity structure and governing documents in place.
You and your co-owners will also need to work out who gets what. This is the most contentious part of the business divorce process. Often times, sound reasoning and judgment is clouded by animosity. A Phoenix business divorce lawyer can inventory your assets and debts, determine how debts should be paid, allocate any remaining assets fairly, and/or determine which owner is responsible for which debts.
Protecting Phoenix Businesses During Business Divorce
Monahan Law Firm, PLC assists business owners located in the Phoenix metropolitan area, including Avondale, Buckeye, Chandler, Glendale, Mesa, Peoria, Phoenix, Sun City, Surprise, Tempe, and all of Maricopa County, with business divorce and dissolution. To discuss how to handle the your business dispute or closure, call Monahan Law Firm today at (623) 385-3190.