Partnerships often begin with a sense of optimism, but some do not work out. If a partner leaves, it can elicit feelings of anger and frustration. It can also have a genuine impact on the company’s bottom line. In such cases, the company or remaining partners may want to file a lawsuit.
Depending upon the partnership agreement or the operating agreement, partners may have the legal option to leave even if it means dissolving the business. However, they are still subject to their signed agreement and applicable state laws.
When is it abandonment?
There are certain conditions where the abandoned partners may have a case:
- The departure recklessly or intentionally damaged the business and benefitted them.
- The departure breaches their agreement.
- Their departure involved embezzlement, fraud or other criminal acts.
- They violated their fiduciary duties.
Disputes (and damages claims) often arise because they did not fulfill the duration or conditions of their agreement.
Litigation may be necessary
Before pursuing litigation, discussing options with an attorney who handles business law and litigation is often useful. The initial agreements may outline steps for resolving disputes, and judges often will rule in favor of a departing partner in search of other employment opportunities, particularly if the initial contract was too limited or unrealistic. Nevertheless, litigation may be the best way to secure financial damages for a partner’s harmful actions. It can help secure funds for the abandoned partners, the business, and even the employees.