Running your own business can be stressful enough let alone when you are dealing with the pressures of divorce and particuarly the financial uncertainty that can bring.
The process of divorce itself is quite straightforward. In the vast majority of cases divorces are undefended and it is merely a paper exercise, with neither party needing to attend court.
The more complex and expensive stage is resolving financial arrangements and this is often where tensions run particuarly high when businesses are concerned. There are different methods of resolving financial issues, such as mediation, the four way process of collaborative law and the more traditional route, of negotiation. Ultimately if agreement cannot be reached matters must be determined by the courts. Whichever approach a separating couple chooses to adopt there is a common theme at their foundation: the concept of full and frank disclosure of the parties’ assets. If either party has an interest in a business then this must be disclosed.
It will be necessary to attempt to value the business and it may be necessary to get experts on board, such as accountants, to do so. If the company owns assets, such as property, valuations may need to be obtained of those. If the parties are unable to agree on values they will look to the court for directions on that issue.
Once a value has been established all the family assets, regardless of ownership, are effectively placed into a “matrimonial pot” and are “up for grabs”. The starting point of the courts is division on the principle of equality: so that the Husband and Wife both walk away from the marriage with equal amounts. However, the court does deviate from this principle where necessary, giving consideration to a number of factors, such as contributions to the welfare of the family and the need to obtain housing, particuarly where children are involved.
Many parties who have a business interest have tried to argue that by virtue of their contribution to the building up of a business they should be entitled to a bigger share of the assets. However, it is only in rare circumstances that the court will make any adjustment on this basis. For those of you with house husbands you should take note that the courts treat the contribution of the non-working spouse as equal to that of the breadwinner.
The court has the power to make a range of orders in relation to any business, or it’s assets. The court will have concern for whether or not the business is a source of income for the family moving forward and where possible in these circumstances it will look to facilitate its continuity, it is very rare indeed for the courts to order and outright sale of a business or indeed the continued joint ownership.
As you can see a husband or a wife’s involvement in a business is a further complicating factor in what is already likely to be a difficult situation. For this reason we certainly wouldn’t recommend following Heather Mill’s example of acting in person. Where businesses and livelihoods are involved and a separation or divorce looks likely the stakes are high and it is important for individuals to seek legal advice at the earliest opportunity.
About the Author: Hannah Budd is a Solicitor at Barlow Robbins LLP which was formed by the merger of the two well regarded and long established legal practices of Barlows and Robbins Olivey in 2004. It is now one of the larger law firms in the South East region with a thriving portfolio of private and commercial clients.
Barlow Robbins has offices in Guildford, Woking and Godalming and provides a full range of legal services to commercial and private clients throughout the South East, London, nationally and internationally. For more information please visit www.barlowrobbins.com