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Thread: Deadlock exiting CC

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    Deadlock exiting CC

    My partner and I are in a deadlock after mediation with our accountant who is taking a step back because he cannot get through to her. We are 50-50 partners in a business that is struggling after 16 years of doing very well. We have not had regular salaries in the last 18 months and none this year. We are managing to pay all wages and overheads (the last 2 months has been touch and go) and do not have debt other than 2 thirty day accounts. I have done everything I know how as far as marketing goes but just can not bring the income back to sustain 7 breadwinners. I have been trying to exit gracefully, bending to the point of breaking to help my partner to carry on with the business as she does not want to accept the fact that the company is in serious trouble. The only way forward is to reduce staff and she wont hear of this, not even putting them on 1/2 time so the staff are all sitting around most days all day. She reviked her offer of paying me a token amount for the assets because of the restraint of trade that I cannot sign. She offered to pay off my loan account over 12 months but wont buy out my share of the assets. Just wants me to sign a 5 year 50km restraint of trade and leave. I am not in a financial position to walk away with nothing, neither can I sign the restraint of trade as I have no other income and need the option to work from home until I can generate an income in some other way. She offered a cash amount and monthly payments to repay my loan account but the company does not generate the income to sustain that. I know as I am the biggest creditor I can apply for liquidation but that is costly, drawn out and messy. Is it an option to rather take my 1/2 of the assets, remove myself from the CC and leave? Is this the lesser of 2 evils? Neither of us can afford a costly legal battle. ANY advice would be greatly appreciated.

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    If mediation hasn't worked to break the deadlock, ordinarily the next "best step" is arbitration.

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    Do you have shareholders/members/directors agreements? What did the two of you agree to if a dispute arises?

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    We have a partnership agreement that stipulates mediation and then arbitration. But arbitration for some reason in a different city??? How does one go about to start arbitration? Can I just skip that and sue the cc for the payment of my loan account which means the cc will have to liquidate in order to pay me. How is that different from me applying for liquidation?

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    Thank you for your reply.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Lilla View Post
    We have a partnership agreement that stipulates mediation and then arbitration.
    ...
    Can I just skip that and sue the cc for the payment of my loan account...
    Like it or not, you're in a contract that requires you arbitrate. Your question also indicates the possibility that you may not appreciate what arbitration is, or perhaps even that you're the unreasonable party.

    It is an alternative, and ordinarily quicker and way less costly mechanism to obtain a determination in a civil dispute compared to going the civil litigation process.
    You will be given the opportunity to present your case and views, and the arbitrator will make a determination based on the merits.

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    I just dont want to fight... at this stage I will just walk away to have my peace. All I wanted to know is if it is an option to take 1/2 of the assets if my partner refuses to buy me out. I have bent over backwards to accommodate negotiations and nothing is enough. I am just so tired and need this to end so that we both can move on with our lives. It is costing me money to go in to the office every day and I cant afford that anymore.

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    Hi Lilla

    I sympathise with you regarding this dilemma.

    It is not an option to take 1/2 of the assets. That would be theft. She offered to pay out your loan account and in my opinion you should not reject that. Your claim to half of the close corporation's assets in my opinion is mystifying; they are not your assets, they belong to the close corporation, in the absence of a liquidation.

    I would really suggest you consult an attorney to file for liquidation and follow his advise.

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    Quote Originally Posted by Andromeda View Post
    Hi Lil
    I sympathise with you regarding this dilemma.

    It is not an option to take 1/2 of the assets. That would be theft. She offered to pay out your loan account and in my opinion you should not reject that. Your claim to half of the close corporation's assets in my opinion is mystifying; they are not your assets, they belong to the close corporation, in the absence of a liquidation.

    I would really suggest you consult an attorney to file for liquidation and follow his advise.
    Thank you for your time, I really appreciate that.

    Do I just walk away after 16 years and leave the business that I've helped to build behind with no part of the assets? My loan account is money that I loaned to the business or drawings that my partner took. She will only pay that out if I sign the 5 year 50km restraint of trade agreement which I cannot sign as I need to work from home (widow) to generate some income for myself.

    I am told that if I file for liquidation it would cost a min of of R40 000 that I would have to pay and try to claim back later.

    I just dont have the energy anymore...

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    Who knows how close you are to the finish line in this? Sometimes you've just got to find the energy to go the next mile.

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