News stories such as those in relation to Amazon founder and CEO, Jeff Bezos’, ongoing divorce. (https://www.bbc.co.uk/news/world-us-canada-46814557) highlight the complexity and gravity of financial settlements in proceedings which involve so-called ‘High Net-Worth’ Individuals – particularly where those individuals are embroiled in highly-successful businesses.
Of course, not everyone will have a multi-million-pound divorce settlement, but the Courts are frequently involved in cases which involve more than what might be thought of as ‘the basics’. Where a business is involved, whatever its size, there will be key questions to be asked as to who owns the business, and whether the business can continue to operate in light of the divorce.
Frequently, we see cases in which one spouse tries to argue that although their wife, husband or civil partner was appointed as a director of a company – and owned shares in the company – they had no involvement in the business and the settlement should reflect that fact (i.e. by only awarding them a minimal amount in respect of the business).
The reality of the situation is that, despite such protestations, both parties would be regarded as having a financial interest in the business – in addition to the more traditional marital assets (such as the family home) – and the Court will expect this to be reflected in the settlement. At Emmersons Solicitors, we have a great deal of experience in dealing with arguments of this nature, and this has shown us that instructing the right valuer can often be key. In one case, when faced with evidence that the relevant business was worth upwards of £350,000.00, we were able to instruct an expert and successfully persuade the Court that the value was, in fact, closer to £20,000.00. The disparity between these values was hugely significant to the overall settlement.
In other such cases – where both spouses are more actively involved in the family business – having had the business valued, the main issue for negotiation might be the question as to who will leave the business; for a number of reasons, it often simply won’t be viable for the business to continue to operate as it had before the breakdown of the relationship. If one party were to bow out, this might allow the business to continue to operate; however, we would need to consider whether one party to the marriage would buy out the other in order to acquire their interest in the business and whether there were funds available for the buyout.
To ensure a buyout is a viable option, our team of specialists can put you in touch with commercial funders, with a view to obtaining a loan which would enable you to buy out your spouse. On the other hand, if you are the party whose interest is being bought – and you’re therefore leaving the business – we will be very alive to the fact that you need to be protected following your departure. For example, we may need to look at unpicking any personal guarantees and obtain indemnities in respect of VAT, PAYE and payments due to your business’ suppliers.
Following negotiation on these points, our Specialist Divorce Lawyers will employ expert drafting skills in preparing documents which will protect you against future claims not only from your spouse but from the creditors of your former business. The risk of such claims arising after the divorce – and eating into the financial settlement which you obtained through the Family Court – highlights the fact that these documents are essential if we are to ensure that there are no hidden costs to a deal which on its face appeared to be a good one.
If you need help with your divorce or separation, then why not contact us for a Next Steps Divorce Advice Session and to see how we can help you. We can be contacted on:
Family Law Specialists Solicitors Newcastle: 0191 284 6989
Family Law Specialists Solicitors Sunderland: 0191 567 6667
or email us: firstname.lastname@example.org
Nine Reasons Why You Should Instruct a Solicitor To Handle Your Divorce – (and the pitfalls of a Do-It-Yourself Divorce) Free eGuide.
We are frequently asked about the value of instructing an expert solicitor to handle a divorce. We have put together this useful guide which will answer many of your questions. If you are contemplating a divorce or separation, and wondering whether you need a solicitor to assist you, then our guide will help you to decide.