Business Breakups: how to break up without breaking the business

What happens when you break up when you are also in business together?
Can you keep running it together?  What can go wrong?  Does it ever go right?  If you have been watching Ted Lasso, you will be familiar with the character Rebecca who in the divorce takes over her husband’s beloved football team - “the only thing he ever loved”- and sets about trying to destroy it. In the same way that custody battles can be devastating, a contest over an enterprise you have built from scratch feels very personal, can be bitter, and when not handled well can needlessly destroy assets.   Does this sound familiar?  Hear more from the experts in this wide ranging live podcast recording!

Watch episode here

Taina Henderson - Henderson Reeves (hendersonreeveslawyers.co.nz)

Shelley Funnell - Henderson Reeves (hendersonreeveslawyers.co.nz)

Transcript

WELCOME to Divorce Café, the podcast where we demystify, detangle and (hopefully) detox the legal processes that follow a separation, with the luminaries, the EXPERTS in the relationship property world.  

We are partners in law and friends in life.  I’m Taina Henderson.  And I’m Shelley Funnell.

TODAY we examine the fraught world of breaking up when you are also in business together.  

If you have been watching Ted Lasso, you will be familiar with the character Rebecca who in the divorce takes over her husband’s beloved football team - “the only thing he ever loved”- and sets about trying to destroy it. In the same way that custody battles can be devastating, a contest over an enterprise you have built from scratch feels very personal, can be bitter, and when not handled well can needlessly destroy assets.

Here to talk about what can go wrong, what you can do when it does, and what you can do in advance to prevent a War of the Roses we have with us tonight:

Ok now I am ready…Thomas Biss, a hugely experienced commercial lawyer who has been working on crises facing companies since the days of Equity Corp…without giving away your age Thomas...  If you do what Thomas says you’ll be fine.  You just need to work out how to get those emotions out of the way.

Stuart Henderson, has had 50 years resolving disputes through mediation, negotiation and litigation and while he is a trial lawyer through and through, I think he is still an optimist when it comes to his belief in people rising to the challenge of resolving their own disputes (with a little legal help of course!). 

Thomas and Stuart welcome to Divorce Cafe!  

Nice to be here.  Thank you.

Icebreaker

Ok, we like to start with a little bit of an icebreaker are they both pulling one out of the bucket ah I think they can both answer the same one. Half of them are really sensible questions and the rest were made up by me.

Best breakup song ever.

Ok that was me.

Elvis Costello’s It’s been a good year for the rose.   Do listen because it’s a great song, it has got this killer line. Because I think what he is doing is responding to his ex reaching out to him after a break up and his only response is you know how have you been, well it’s been a good year for the roses.

And I hate to…Elvis Costello is one of my subjects of excellence and it’s not actually written by him.  He does sing it.  It is a great song, anyway.

If you are going to do a break up song it’s going to have to be Billy Connolly D-I-V-O-R-C-E.

Billy Connolly did that one?

He did yeah. [She sings]

[from the audience: Speak up please.]

He does a version of that.

Well you’re lucky you missed that one ‘cause I sang.

But yeah, we we’ll try.

We could add C-A-F-E at the end of that song.

Ok so the Basics: we always like to start with the basics so that we are all up to speed on today’s topic, Thomas I am going to start with you.

How do people generally set up a business within a relationship and what are the usual structures?

I would say that people don’t think about a business so much in a relationship.  It’s just one of those things that more often evolves.  So you end up with a company for most people that is what most businesses are in. If you are farming for a lack of much thought farmers for some reason end up in partnerships.  Because no one else seems to use partnerships these days.  Old lawyers and farmers.

And you have some sole traders where you have got a tradesman normally out, your sparky or a builder operating on their own account, maybe they have got their wife at home

Doing the books at home. 

So to you Stuart you’re the litigator, the relationship property lawyer.  How is a company classified in relationship property law/who owns it when the parties separate?  

A company that is formed for the purposes of the relationship or during the relationship, whoever are the shareholders it is relationship property.  

The shareholders who will be holding shares in an asset that is the relationship property of the marriage.  So if all of the shares are with one person, or 99% one party and 1% the other, it’s relationship property all of it.  So the one% shareholder, half of that share belongs to the other one, and the 99 % shareholder half of that belongs to the other person.  Because the whole purpose of the Act was to treat the property that is accumulated in and for a relationship as property that needs to be shared, usually equally.

But from my perspective as a company lawyer, I don’t care.  From a companies’ perspective it’s who’s on the register.  So on the register it probably has said 99 shares for one party, 

And the tax man…

And the tax man probably doesn’t care, just wants that tax.

But when they split relationship property gets divided 50:50, unless there’s one of the exceptions so that’s how that works.

So looking at the structures that tends to be quite a common scenario doesn’t it, where there’s one partner, usually the male, would we say that?

You tell me off whenever I am dealing in genders.

Well in my personal experience, 99 shares owned by the male, 1 by the female because their accountant has said to set it up like that.  Do you think, that’s the accountant?

That’s normally historical from a qualifying company which is out of date now.

And the other thing is usually either both partners are a director, or one partner is a director, that’s kind of how it tends to go about.  Which has an effect on how things happen later.

It has an effect on the immediate control, rather than the ownership.

Control and ownership, that’s really good.  We’re going to go into those later aren’t we.  The differences.

We’ll go to the bits we find interesting?

This is what we find interesting.  We are nerds we’ve got to say that.

To both of you whoever answers first: What can go wrong when couples who are also in business together separate? And what are some of the other situations you see people dealing with?

What can go wrong? Everything can go wrong.  What happens is you start fighting.  And so the company can end up, or the business can end up unable to make a decision.  Unable to move.  Things not getting done or things being done to spite someone.

Or you can end up without a clear purpose.  A business is set up to make money, and suddenly it’s become a vehicle to fight.  And so if you are not careful that’s where you end up litigating, you know you can litigate in the family court, you can litigate in your business as well.

And once in motion, it’s not fair to say greed, but dollars are involved, it is wide open for a really difficult situation and I think the best answer I can give to your question is to talk about a case, and I am mixing up the facts because it’s a real case, or it’s two real cases, and I am doing what always seems to be difficult in legislation, Party A and Party B so that I am not genderising it

Good

And it’ll be more anonymous.  Couple, couple of businesses.  Party A was the active businessman, Party B was a salaried worker and they split up and early on there were some emails to and fro.  Some sensible proposals for division, there were some family members involved in the businesses and it all fell apart and I still don’t recall what the trigger was but suddenly party B the salaried one decided that that person had to I am struggling to avoid the gender…

You can use he and she.

…Had to fix the other’s wagon.

Is that a euphemism? 

Yep.

Or an actual wagon?

It is also unusual because one of the things that was done is that the business that was being run by Party B was successful and he ran it quite well.

Just do it he and she, it makes it easier to understand.

Ok, he ran it quite well.  But she wanted to fix his wagon, froze the bank accounts after withdrawing all the money, bought a car, and eventually closed his business…essentially closed his business down.  Freezing his bank accounts meant that he had to run off to the bank manager and sort out a brief line of credit to keep things going.  And it was chaos.  Now at that point he consulted a lawyer and what was started was first an attempt to use common sense and say: we can’t go on like this, it’s got to be sorted out, you need to do this, if you won’t agree with anything then it’ll have to go to Court, that’s going to be expensive.  And that is when emotion and money were heavily involved.  And there was no resolving it, and the property relationships Act enabled him to make an application to transfer all the shares in the company in their joint names into his name.  And the family Court was prepared, was capable of doing that to give him the control of the company because the bank weren’t interested in doing anything for him because he wasn’t the sole director, and he wasn’t THE shareholder.  And so the Court and at the end of the day there was about $300K spent.  And it’s still not solved.  The proceedings had to be started, an application for urgent treatment - and with Courts urgency is a mixed bag, had to be filed to vest the shares so that he could rescue the business because it was rapidly turning into custard, and the Court wouldn’t make an immediate order.  

It took three months to get to the Court room door.  It took three months for Party B to consult a good lawyer and it was only the Court room door that led to an agreement that he could run the company.  He got to the bank, he unfroze the account, he got it running, and after about three years it went to Court and there were several things that were really important.  One thing that was really important was the common sense in the first endeavours to negotiate a sensible solution.  The judge liked the common sense of the paper trail of attempts to get common sense and it’s a total mess.  

Now I don’t say that to you without suggesting an answer.  And it may not have been there.  Certainly we didn’t get any agreement as to how to approach it, but mediation is what the two should have done.  Somehow, whether by getting influential people to talk to them, somehow there needed to be a mediation with the two of them looking at the long term, looking at the common sense, looking at the things that were gonna go wrong, looking at the fact that they might still be fighting in 6 years and have spent mega bucks on lawyers.  So that’s where things can go wrong.  You can go to Court to get things resolved, but that’s not going to happen quickly.  You can’t guarantee what the Courts going to do but it has the power to make sense out of those things, and the reason it was resolved at the Court room door, was because the other party’s lawyer said “this is what the judge is going to do” and when I say it was a good lawyer, she was a good lawyer, she was experienced and she knew the way Courts would operate, so that client at that stage realised that the common sense thing to do was to leave the company in his hands.  And that’s what can go wrong.

So they were both directors?

Despite the best efforts…

And 50:50 shareholders

I don’t remember…

Joint shareholding.

So they should have got them at the stage when they were looking at sensible solutions and gone to a mediator then, should they?

The thing that frustrates me, you say I am an optimist, the thing that frustrates me is that nothing, nothing worked to get common sense and that’s emotions, money, revenge and control of the funds, payback for things I don’t understand.  It is just such a horrible situation and things can go wrong and all of the theories, all of the plans I can come up with…we’ll solve it this way, we’ll solve it that way…the Courts do have powers to solve it but they won’t move quickly, they won’t move certainly, and somehow you’ve got to bring common sense to the situation and mediation is the best answer I know of.

Maybe if you had sent the bill at the start. 

I think, what you can’t avoid is that you are dealing with people in relationships and the best thing you can ever try and do is get people to try and understand their relationship and what they are trying to achieve.  But sometimes what they are trying to achieve is pain.

Perceptions of fairness and what you are getting in relation to the other person can be a little skewed depending on where you are coming from, what information you have. 17.29

Ok so you have touched on this a little bit, but what legal remedies, so say you have tried to work it out a little bit, and you have hit a brick wall, what legal remedies are there to deal with what can happen?  What are the most useful ones?

Can you give us an example of when you might use a particular remedy? 

So Stuart has talked about a key one there which is where you are using the relationship properties act to force a transfer of shares which gives control of the business - can continue on, and you can argue about the benefit of that later.  So that is a really good outcome if you can get that, so that’s allowed a business to continue.  

But the reverse of that is to turn around and say, if we can’t work together we have to liquidate. And that is like the extreme ends of it, but liquidation isnt the worst outcome.  

So tell us how do you achieve that.

You appoint a liquidator for the company, and the liquidator starts spending money worse than lawyers do.  You laugh but it’s true…they spend money faster than lawyers, but they’ll turn around and say they’re going to wind up the company, and one of the things they can then do is sell it. Right, so they’ll sell the business. So if one of you wants…that then leads to one party can say well I’m going to buy the business from the liquidator.  Now that is a little bit of a scorched earth policy but if you can get to that point you can take something.  Liquidation is not always that easy to do because if you‘ve set yourself up, and what I would normally recommend to two parties is a deadlock type situation, where if you have both got 50:50 control you cant necessarily liquidate because you’ve got to agree to it.  But then you can go to Court, and again a Court might turn around and say: well I am not going to do it.  But all of those are options you can put it before a Court: we’ve tried this, we’ve tried this, this company has no future.

You are needing to look at what the different levers that you can pull are, I guess what you are talking about, there’s a relationship and that’s between the parties, husband and wife, but there is actually a third person in the room…maybe that was the problem as well maybe that was the problem to start with.

That was the fourth person…

There’s the third person in the room which is the business.  So the business exists as well.  So if it is a company the company is a legal person too.  And so the company has some rights and powers and some controls that you can look at and it may be that the company owes money, you’re talking about that, it owes me some money and I’m going to demand that and take action against the company.  But also the company has some remedies and you might end up with someone who turns around and says: well the directors have got duties to this company to at in good faith.

So just to give you a case, a case study sort of thing, what if one of the directors goes feral and starts making decisions or taking actions that are clearly not in the best interests of the company?  They have arguments with the staff, they threaten to fire the best sales person who just happens to be the best friend of their ex partner, maybe they start transferring money around, 

…they freeze bank accounts…

They’re doing things, they’re refusing to pay their staff, they’re refusing to pay their creditors.  There’s all sorts of stupidity that can happen

At that point you are damaging the business you are causing that harm, hopefully there is some rational thought but you then turn around, there are remedies against a director…

Replacing a director 

But all of that gets you back to Stuart’s point before, if you are needing to go to Court you are likely to be talking some time.  And even, you probably would get something along the lines of some urgent injunctions to turn around and say we’ve got, there’s a range of shareholder remedies or company remedies whether it is for oppressive conduct by a shareholder or director against the company or against a shareholder, or breach of director’s duties.  There’s a range of remedies that the company or shareholder takes against the person taking the wrong.

But again you have to have a majority of shareholders or a majority of directors to make certain claims, so it comes back to: do you really want to take a legal remedy.  What are the other remedies, what would you be suggesting?

Well you’ve got to talk, you’ve got to get some, you’ve got to start to understand what’s the consequence.  What are you doing?  You’d hope in a business, in the family aspect of it, raising your children, how you deal with this, who’s keeping the dog, those sorts of points, those are emotional.  Somewhere in there you’ve got to get back to this is a business and it exists for the purpose of making money…

There are the horror stories, you do see people who can put it aside and continue to run a business, because actually we’ve got the common intention, we want to make money and that goal can continue and you can understand that.  So if you are trying to communicate and get a consensus there, you are hoping for some rationality.  And you can start to set up in an ideal world you’d have seen a couple set up a shareholder’s agreement.  You don’t see that very often in all honesty, at the point at which a couple sets up a company, if there’s just the two of them, they probably wouldn’t do that.  They are not expecting to fail.

And is that because they’re not getting advice to say this might go wrong.

Probably, and it’s kind of difficult, you’re saying what are you going to do when your husband runs off with someone else, or whatever, how’s it going to work?  That’s an odd conversation in terms of the business.  But you might at the point at which you have split up and said, we are not actually in a position to separate this company now because, well frankly we don’t have the money to pay each other out, or because actually we are both working in it, it’s both our livelihoods.  And if you can get the rationality of “our best interests are to keep it going and to run the business, you could then set up that sort of shareholder’s arrangement.

Do you think it is possible to continue to run a business after a separation?

And you’ve seen it, I’ve certainly seen it, I can think of a number of examples of it where it works, perhaps not long term.  And it works perhaps until someone gets married again, or perhaps for a period of time and you can set up some arrangements..

So what are those arrangements?  So you are looking at arrangements that deal with what happens when we can’t agree on important decisions

How are we going to do this, how are we going to manage payments, do we both have to agree any payment out, or do we have to agree any payment over this, or how do we do payroll has to go each week.  And we’ve got all those sorts of arrangements, we can set that up.

How much are we going to be paid?  

And I’m not going to take any money out.  Or you can put things out of temptation as well, you make sure that it’s managed.

So would you go and sit down with the lawyer?

Yeah, probably yet another lawyer.  One for the business as well.  and you can set that up.  And everyone has got to want to do it, but it is for that purpose, because you have got that goal, if you can get…and everything is about a relationship.  We want to get the terms of our relationship.  we don’t want to live together any more, but we do still want to make money.  And that maybe is optimistic.  Stuart says he is an optimist.

I said he was an optimist.

OK, you’ve got to have some optimism that that…and I think that is possible.

There are some good reasons to make that work.

There is.  And it isn’t as fundamental as how you raise your children.  

But people can cooperate well over how they raise their children, and they can cooperate well about how they are going to run their business.  And I have seen separation agreements, deeds of settlement of property which have said, we intend to continue in the business and here’s how we’re going to handle it, and one of the clauses in that contract said if we fall into dispute, here’s how we’re going to resolve the dispute.  And quite often a really good dispute resolution clause which says for example if something happens that we cant agree on the first thing is that we will try and agree and when we haven’t agreed then we will go to a mediator, and if that doesn’t work we will…and a whole series of things, and if you are at the stage where you have been running your business for a wee while and you have got a dispute, and you think how am I going to resolve…the last thing I want to do is go through that rigmarole, and they common sense prevails and they knuckle down and resolve it because the alternative is a nightmare or potentially a nightmare. 

Another thing that can go wrong in a relationship break up is where there are some good and instant legal remedies are worth taking, are things like where both parties have been working in the business, maybe one is the bookkeeper, or maybe they are paid housekeeping, they have got a shareholding so some of the expenses can be run through the company, that is pretty common…

Hope there is no one from IRD here.  That never happens.28.15

Often the next email that the person gets is an email telling them their services are no longer required and their shareholder salary is going to stop being paid, or their wage.  If they are living in a company owned house, sometimes the animosity is such that they get a notice requiring them to move out.  You can go to the court and say, I’ve got children, we were in this home, we need to be back in there.

There is actually a case, Singh v Singh Farms that talks about there was a husband and a wife and a father in law all involved in the company.  And the husband and the father in law gave the wife notice that said: you’re out.  And she was able to go to court and get an order to say they were acting for an improper purpose.  Directors have to act for proper purposes and so the resolution they had made to kick her out was invalid and she was able to stay.  She got an occupation order.  If your salary has been stopped you can file a PG a personal grievance sometimes for unjust dismissal, you are employed by the company.

And employment law is one of the areas that moves faster in the Courts than a lot of others.  An employment grievance will normally get, you will get to a mediation pretty quickly in an employment matter.

And sometimes you have a lot of annual leave, sometimes you haven’t taken any annual leave.

Businesses can’t have it both ways, they have an employee that is an expense that they deduct, or they don’t have an employee.  If you have an employee, you cant dismiss them peremptorially.

And Courts don’t like it when you do one thing for one reason, like I’m just employing her because I have tax efficiencies, well they say, no you know you cant take the benefit and then not have eto pay the price of having an employee.  They are quite good in that respect I think. 30.51

And that employment law solving some of the problems, and the family court is really good at making occupation orders to rescue those situations 

It happens quickly, and when you are talking about getting to the Court door in 6 months, we’re not talking about that with an occupation order are we? 31.42

Or spousal maintenance.  Spousal maintenance is the one where they have cut off all your income, you’ve got kids and groceries and things like that, spousal maintenance is another one where you can apply without notice actually with the right conditions.  

My horror story in the months to get to the court room is truly a horror story, and one of the problems there was that there was a counter attack that we had to acknowledge so the judge wasn’t prepared to make an instant order.  The court is good, the family court is really good at stepping in and making orders for occupation, or vesting the tenancy in one of them.  Had a situation once where there was a mortgagee sale coming up, she had arranged refinancing and he wouldn’t sign the documents and he really just wanted her kicked out by the mortgagee.  Passive aggressive, he didn’t want to be the one doing it so he refused to pay the mortgage when the mortgagee sale was pending, she arranged alternative finance, he refused to sign the documents.  And the court vested the property in her for the purposes of resolving this dispute and she was then able to sign without needing his consent, so the courts have got lots of good remedies for unravelling those difficult situations.  Some of them, Courts aren’t up to doing it efficiently and quickly but most times yep.

So one of the points Stuart touched on a bit there is that one of the things you can also do is get other people to do your dirty work.  And no-one will do dirtier work than a bank

Except for a lawyer…

So you can pre-empt a bank to do certain things aswell by..

Well that leads into the next question which is what practical things can be done in the immediate aftermath of a separation to avoid destroying everything you have built up and one of the things people worry about is we’ve got a $100,000 loan facility in the company or you know there is $80,000 in the company bank account. What can you do, what would you recommend.  I have separated, I think he is going to burn it to the ground?

What would you recommend?  I was busy saying you want to be sensible and rational and preserve value and all of that.  But the quick advice you give is: empty the bank account, which is terrible thing to say but it is one of those bits of advice that people give.  ‘Cause it’s in your control then.  I am not sure that that is right, but it is one of the bits of advice, but…

I usually say you can do that, but you are going to burn all of the trust, and you risk starting a domino fall that wouldn’t have started.  

You need to think about how you deal with it, you need to think about how the bank is going to react as well.  And you can pre-empt the bank to close things down if you try hard enough and you say scary enough things to them.

Can you put a limit on?

You can ask the bank to close accounts or to limit the accounts.  There is a range of things. You’re going to have to have authority to do that and you wont necessarily have that depending on how things are set up but again as I say if you have probably given guarantees you can start to…

…give notices under guarantees.

Cause a guarantee once you have given it until in most cases you can give notice so that future…

Yeah and that will be a condition of the bank’s finance continuing that the bank’s guarantee remains so that the bank will then start to pull back.  Depending on…those are things that you really want to do carefully because you don’t want to have to pay all your money back to the bank because its normally not a convenient outcome.

Stuart’s story was using the bank to force a mortgagee sale.  That’s not a smart move…

Because everybody’s credit rating…

Because everyone loses money.  On the other hand depending on who you are dealing with

It’s an immovable force.

You’ll get something…someone’s waving a clock at us.  

Times up.

Whatever you do, Taina’s point, you have to be careful what you do because you may explode things and approaching the bank and saying I want this I want that will often lead, unless you have two people duly authorise, will often lead to the bank saying I’m going to close all your accounts, I think you are a danger.  And an unexpected outcome that might be devastating might occur, you’ve got to move carefully.

So again, talk. 

Yes.

Find a way.

Find your common ground.

Yeah which is great in principle, I did have someone that they played mortgage chicken or something and she would put the money in just before the mortgage went out, and he would try and take it out just before it went out.  I didn’t even know what to say to that.  But maybe go to the bank and say, can I pay into a different account, this isnt working.

And you can have an agreement to freeze an account except for regular payments?

Do you want to go on to….

Which question?

Question 5.

Number 5, ok

What do you recommend doing when you start up a business to protect the company in the event of a separation? 

I think its really interesting talking about where they’re both are directors but that often isnt the scenario is it, that you would have one director and the 99% shareholding.

Yeah, it’s an interesting one.  We see when a company is borrowing money and we see a husband and wife and the wife is probably guaranteeing it because she also owns the house or the husband is guaranteeing it.

And they may or may not have any idea what the business is actually doing that they are guaranteeing.  That is the point at which we start to get nervous as lawyers.  What can you do?

In the perfect world you would be saying you should have some sort of shareholders agreement an agreement as to how this business is being run.  In reality I don’t think that happens between husband and wife.

But it could do right. How do we break a deadlock?

It could do.  We do pre-nups, we do a contracting out agreement, but I would say that I don’t think it generally deals with running the business.  It deals with the ownership of stuff and it won’t generally deal with it.  I certainly see if you talk about a larger business here there’s maybe four or five owners there’ll be a range of agreements that talk about taking shares away from an ex partner or stopping that happening or some claw back arrangements.  But I think in the reality of things there’s only so much you can agree to manage that relationship.

What about a shareholder’s agreement?

You can,but…

The common scenario is that you start off with not that many assets, you start a business together you slowly you build this up so at the beginning you are thinking “let’s do this” let’s start up a company.  You’re not actually saying I’m going to spend $1,000, fifteen hundred dollars to do a shareholder’s agreement. but in retrospect $1000, $1,500 whatever you pay…

It may be though, probably more likely on a second relationship you’ll see people who have been through it once or twice, if they buy a new business they may set it up…hindsight, burnt once, that’s more like…

Or their parents have done it and their parents are telling them..

Or you listen to this podcast, and you see how wrong it can you and you think “what’s the harm?”.  It’s like having a will right, it doesn’t make you die.

As a sales technique, that’s just awesome.  Have a will, it won’t make you die.

You don’t have to die. 

Are there any other issues that couples should know about if they are thinking of starting a company or a business together.

No, I mean we’ve covered.

I think there is a point somewhere in there you say, things go wrong, but not every time, right.  The rational outcomes, try to be rational and trust in the fact that actually you ought to have a common purpose, and it’s easier to reduce things to dollars in a business and split them in half than it is to 

You can argue about the dog…

The dog is slightly different, or whether you are going to…what school you send the kids to is much more complicated.  A business really does just come down to money.

 How do I break up with my business partner.

Text is the traditional answer.  

Change your facebook status.

“The locks are changed, see you in…”is a good one

We’re in business by the way, all of us.

I’ll just get my phone out.

Paul Simon’s advice must be the best, there must be 50 ways to leave your lover.  Slip out the back Jack, make a new plan Stan.  Sorry

But seriously, if you are talking about… “asking for a friend”, if it’s not working and you want to break up with your business partner what is the best first step?

I think you need to say, hey I am thinking about how we could deal with this.  I am not sure that this is working.  I am thinking about what, how we could deal with this.  Because you could be you are going to, you could sell the business, you could sell the whole business and very easy to split up the cash.  Or you say look I am thinking of leaving, are you thinking of leaving?  Those are the really easy answers.  One of you leaves or both of you leave. 

Then there’s leaving vendor finance..

There’re arrangements in there.

We can work it out.  That’s another song.

Another Beatles song.

You are not going to get there by text, you are going to have to talk.  And you are going to have to listen as well it’s not just talking.  Sometimes you have got to listen. 

54.12 The second to last or penultimate section is quick fire question time so you guys get 10 seconds to answer 10 questions and we are going to alternate between you.  

If you are thinking of separating – I’m going to go either one of you – if you are thinking of separating, what is one top tip for something you can do to protect your company?

If you are thinking about separating.

Reach agreement with your partner.

What is the difference, this is Thomas, what is the difference between a current liability and a non current liability?

A current liability is payable within 12 months.  That’s an accounting question not a legal one.  But I am sure that is right…

We don’t give accounting advice. Go and ask your own accountant

Is there an accountant in the room? Is there an accountant in the room?  Yeah, it is right 

I don’t even know if I can ask the question within 10 seconds.  

I’ll do this one.

Ok do it, no you go.

Which is the odd one out? 

a. the shares in a company started during a relationship, 

b. the family dog, 

c. shares in a company started before the relationship, 

d. a shareholder’s current account balance?

The shares before.

Yes.

Because they are not relationship property.

He is a very good lawyer.

True or false? The phrase ‘lifting the corporate veil’ means coming up with a great idea for a new business on your wedding night?

Yes.  Definitely true.  Looking behind a company to find out who the shareholders are.

I feel like I want to put this one to the audience but we’ll start with you guys.

What are some signs you shouldn’t be starting a business with your partner?

Trust really.

Lack of.

If you don’t trust them.

If it is a whirlwind relationship and you have only known them for 3 weeks.

You are both in business with family members.  What is the secret to working and spending Christmases, together?

You have got to be a good cook, cause like Christmas you don’t want to spend some time with someone who can’t cook a turkey.

Being good people.

Being good people, gosh.

But you can’t pick your…

Respect, trust and faith really.

I don’t mean that in a religious sense but you have got to have trust in and I think it is all down to trust.

And benefit of the doubt I think as well.  

Well hopefully not having doubts.

We all have doubts Thomas.

Which is harder to raise together: children or the value of shares?

Does it depend on the children? 

Have you met, you’ve not really met my children.

I HAVE met your children.

Children are harder in every way shape and form about absolutely everything.  But creating value is not an easy thing either. 

Is it better to have loved and lost a business, than never to have loved at all?

Does it depend on the business?

Depends on the business.  You could lose a business and be quite happy I’d have thought.  I’ve seen plenty of people who thought they were in business and who were actually working for nothing.   And I think if you are working for a business that’s not…the business is there to make money and if it’s not making money then you shouldn’t be in business.  

OK, our last section, segment is called the best question ever:

We often focus on the nasty side of relationship disputes.  But earlier this week I spoke with a man working through the end of a long term relationship, who was referred to me because he was taking far less than his legally determined fair share.  

When I asked him why he would do that, said “That’s just what I want to do.  My main priority in this settlement is that my wife is well set up.”  

The best question ever is: what is it that enables some people to come to a dispute with such humanity and grace, when others don’t?

Just a light one.

Some people are better than others.  I think that is true.

I think that is right.

I think sometimes the role of a lawyer is to help us be better.  Right, and like, with hindsight people can turn around and say, you know I didn’t do the right thing there.  And sometimes the right job for a lawyer is to say: that’s the wrong thing…you could do it, but you ought’nt to.

The most valuable part of my job is being able to work with someone, understand their problem.  Have them enough confidence in me for me to say – to guide them forward.  So there is sort of education, there’s sort of confidence and trust between us, and being able to give the good…actually I have forgotten your question…but being able to give the good advice and have the matter move on, that is the most…

I often say we go through relationship break ups, and those sorts of things, we go through hundreds of them over the course of the year, and we get to say – we’ve seen it before.  We get to say, we know what happens next as lawyers.  You know we’ve done this more often and I think one of the things: yeah you can do that, but if you do that, this is what happens next.  If you say that to her, you are not going to get a good reaction.  And if you do that, if you take all the cash out of the account, you destroy trust, so this is what happens next, is that what you really want?  It’s not the best outcome.

And in business it is easier to get to the dollars and say: the best outcome is this.

And some people are just not up to taking good advice at that time sadly.

OK, well this has been Divorce Café – hope you have taken something interesting out of that.  If you enjoyed this episode please check out our other episodes on line.  There will be an article attached to this one.  And you can also contact us.  So yeah we’ll see you next time.