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1stlifeline

How to close a business with debts-partner problems!

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Thank you for reading this, I will keep it as 'to the point' as possible.

 

2 partners start a business.

 

Partner A and partner B each has a 50/50 share but the business loan is taken out in Bs name only.

 

Partner A works the business full time but has not been able to take a wage for 18 months due to low turnover.

 

Partner B has always worked full time in other employment.

 

The business has to close with £9000 debt for which both are responsible in theory but on paper its all in partner Bs name.

 

Partner A does not want to 'do the dirty' on partner B but at the same time has worked for nothing trying to build the business for both partners and has lost out on income while B has carried on earning a living.

 

The debt has to be paid by both partners but morally should B not shoulder a bigger percentage as they have not suffered loss of wage for 18 months while A has worked for nothing on both A and Bs behalf.

 

This is going to be tricky to sort out and I would appreciate others views on this please.

 

Thank you.

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Onus mostly on B - suggest 75/25 split.

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Thank you smouk, trouble is that B thinks its ok that A has worked for nothing because A is part of a couple so there is another wage going into home. A thinks thats not really relevent as B wouldnt have worked for a week for no wage let alone 18 months.

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what kind of business is it ie Ltd company?

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A thinks thats not really relevent as B wouldnt have worked for a week for no wage let alone 18 months.

A shouldn't drag this into it as B has, after all stumped up the wherewithal so whilst A has a decent moral case he should respectfully acknowledge B's input.

 

Now if B wants to get personal then the gloves are off......

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To be honest neither wants to fall out but its getting edgy. B is worried about getting a CCJ (its not a Ltd company) whilst A has already got 3 and had to go into rented property because house up for repossession due to not being able to manage morgage because of no income.

 

. Have to say A is feeling increasingly bitter as put all the work in on both partners behalf and took the wage loss all that time while B has, until now been able to continue a decent standard of living.

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Maybe just do it from a numerical point of view.

 

Work out what B put in, say: £10,000

 

Work out what A would have earned if they had taken a fair wage, say, £250 a week over 18 Months: £18,000

 

In that case, total investment is £28,000 between them, plus the £9000 of Debts they now owe making a total of £37,000. Call that the pot that must be cleared down to zero.

 

Split that 50:50 makes £18,500 each. They are each responsible for £18,500 of a combined £37,000 pot.

 

Partner A has injected £18,000 already (via working for nothing), so only owes £500 towards the pot to clear it down to zero.

 

Partner B has injected £10,000 already, so needs to pay another £8,500 to clear the pot down to zero.

 

Or you can get the same result by working it out as percentages, but the key issues are the £9000 debt, the initial Cash input by B and the numerical figure that must be established to reflect the hours that A worked without drawing a wage. That will have a value, and that value is the amount that A injected into the Business, albeit as Virtual Cash.

 

Who owes what may work the other way around if, say, B injected £20,000 and A was valued at only £200 a week and not £250 a week. But you may see how to tackle it that produces a fair split of the £9000 liability for the two Partners.

 

Cheers,

BRW

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Couldn't have said it better myself:p

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Maybe just do it from a numerical point of view.

Work out what B put in, say: £10,000

Work out what A would have earned if they had taken a fair wage, say, £250 a week over 18 Months: £18,000

In that case, total investment is £28,000 between them, plus the £9000 of Debts they now owe making a total of £37,000. Call that the pot that must be cleared down to zero.

Split that 50:50 makes £18,500 each. They are each responsible for £18,500 of a combined £37,000 pot.

Partner A has injected £18,000 already (via working for nothing), so only owes £500 towards the pot to clear it down to zero.

Partner B has injected £10,000 already, so needs to pay another £8,500 to clear the pot down to zero.

Thank you for the replies. I dont think I explained my opening post properly,-

 

A and B invested equally, the initial start up loan, even though being in partner Bs name is continuing to be paid back on a 50/50 basis by both A and B.

The 9000 debt is in addition to the loan arrangement and thats where the sticking point is. Both will have to pay the loan for the next 3 years so both made the same initial investment but A has lost out financially over the last 2 years whilst the other partner has continued to earn a living whilst A has carried the business on boths behalf.

Edited by 1stlifeline
spelling mistake

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