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Marital Breakdown & Business Failure – The Unspoken Pitfalls of Separations


This article has been provided by Peter Lynn & Partners

Restructuring businesses is something that frequently hits the headlines when a business is bought or sold but it is not something that is often considered when there is a marital breakdown.

A family enterprise can be established in many different ways and this will have a direct impact on how the business is dealt with during a marital breakdown.  The family business is not shielded from the proceedings, even if one partner has nothing to do with the actual business.

Consider the following situations:

  • Wife or husband is added as a director, so they can take a salary, even though they do not attend the business.
  • Partner is given some shares, so that they can take dividends.
  • A partnership exists but with no formal arrangement meaning that it is automatically governed by the Partnership Act 1890.

Each of these scenarios could present a real headache when looking to split a family business.

For a limited company where husband and wife or civil partners are involved in the business, having the positions documented correctly allows not only for the business to be managed through successful times, but also to deal with any future splits.

What can we do to help?

Shareholder Agreements

Stating who owns what and how these shares can then be transferred in the event of a dispute or the need for a split for any other reason. Crucially, such agreements will also deal with how the shares are valued.

Service Contracts

Providing a mechanism to deal with a director leaving voluntarily (or otherwise) and managing any post-termination restrictions.

Partnership Agreements

Crucial to determining who owns what and precisely what is contained within the partnership and what is not. Failure to document partnership agreements can lead to lengthy battles, in the event of dissolution or statutory rules being applied that you never knew existed!

“A family business can bring many rewards but if matters take an unexpected turn, this could prove one of the hardest aspects of a matrimonial breakdown”

For expert advice that combines matrimonial advice with commercial law, arrange a meeting with our team by emailing [email protected]


Peter Lynn and Partners was established in 1999 to offer top quality commercial and civil advice to businesses and people in Swansea. With several offices in the heart of the Swansea area and a base in Cardiff as well, PL&P offer a wide range of legal advice and services to individuals and businesses across the South Wales region.

Their experienced solicitors provide a high quality service, which is tailored to the specific legal needs of the client, and ultimately aim to be ‘Preventing Legal Problems.’ We provide our clients professional legal services in lots of different sectors including Personal Injury, Family Law, Wills and Trusts, Residential Property, Commercial Property, Litigation and Dispute Resolution, Criminal Law, Agricultural Law, and Sports and Entertainment Law.

Peter Lynn and Partners have 40 members of staff which contain nine partners, 21 qualified solicitors and paralegals who are backed by a team of seven support staff. They are committed to securing the best outcome for all our clients.


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