NSW Financial Settlement with Family Business as Only Asset?

[Crusader2]

Hi, would really like some help on the following:

* Separated June 2013
* No home asset
* Only real asset are two family businesses, one large (operated by husband), one small business (operated solely by wife part time)
* No financial agreement or paperwork completed since separation
* Husband pays rent and $1,000 per week to wife (myself).
* Wife could not survive without this maintenance to support herself and son
* Son over 18, full time student lives with wife
* Husband in de facto relationship with GM of company who is on an unusually large part time salary
* Husband since separating has closed down branches and tightened up operation so the company should look better on paper now
* There was an offer on the table Jan 2013 for the company $1M and management agreement for 3 years. This fell through.

My question is,
* Is the business valuation done at date of separation or can it be date of financial agreement (property settlement), i.e. now?
* If I can negotiate a profit share of the business on eventual sale can this be secured by a caveat? Am I able to legally request that I am privvy to annual returns and no sale can take place without my authorisation? A management agreement with this type of business on sale is expected, can the prospect of this be used in the calculation of husband's forecast income ability.
* If the company demonstrates its ability to pay my rent and maintenance, can this be enforced for more than 3 years (he is stopping it after 3 years at which time he will pay me out of the business at no more than 400K or 40%, whichever is less.
* If I have an agreement with consent orders how would this be placed if his de facto wife (and employee of the company) was to separate from him and make her own claim?
* Would it be worthwhile to pay the quoted $10K to have a proper business valuation done on the company?

Thanks for any information/advice in advance.

 

[Sarah J]

Hi,

1. The business should be valued at the time of negotiation/agreement not time of separation.
2. Is this an actual private company that has been incorporated or is this a sole proprietorship?
3. A company has separate legal liabilities to your ex-partner. Your ex-partner's personal financial obligations (e.g. to you as part of the separation agreement) should not be coming out of the company or born by the company without following proper procedures and the companies law. Similarly, if your ex-partner is a director of the company, he should not be channeling company funds toward you unless there is approval from the company.
4. Are you a director or shareholder in this company?
5. Your agreement with your ex-partner is distinct from that between him and his de facto partner.
6. I cannot really advise whether it is worth doing a proper valuation for $10K. This would depend on the parties' relationship, the value of the company etc.

 

[Crusader2]

Hi,

1. The business should be valued at the time of negotiation/agreement not time of separation.
2. Is this an actual private company that has been incorporated or is this a sole proprietorship?
3. A company has separate legal liabilities to your ex-partner. Your ex-partner's personal financial obligations (e.g. to you as part of the separation agreement) should not be coming out of the company or born by the company without following proper procedures and the companies law. Similarly, if your ex-partner is a director of the company, he should not be channeling company funds toward you unless there is approval from the company.
4. Are you a director or shareholder in this company?
5. Your agreement with your ex-partner is distinct from that between him and his de facto partner.
6. I cannot really advise whether it is worth doing a proper valuation for $10K. This would depend on the parties' relationship, the value of the company etc.

Hi, thank you so much for your reply.
The company is incorporated, my ex partner is the only shareholder/director.
I have met with the company's external Accountant on ex partners insistance. The Accountant will be ensuring the legal obligations of the company side will be done properly.
The Accountant was adamant that in order to get any payout on the sale of the business I must leave 100% control and directorship with ex partner.
If I am leaving my % share of the company in it, i.e. my ex partner does not have the cash to pay my share out of the business until it is sold, would a caveat protect my interest so he could not sell it without me knowing? Would this give me an entitlement to see the annual returns each year to make sure it is not being drained of money? Is there any better way to do this?
It is a difficult situation with all the balls in his court.
Thanks again for your help.

 

[Sarah J]

If you are not currently a shareholder in this business, then what interest do you have in the company? When they want to relinquish control, what control are they talking about?

Yes, if you place a caveat on the company then you will be notified of any dealings with the company and any dealings will need your consent.

When parties divorce, all personal and joint assets, including any interest in companies, are placed in a "shared pool" and this will be distributed according to family law financial division principles. There are no clear and absolute way to distribute as each case depends on its own facts. However, the court will take into account a number of factors, including:

- Earning capacity of each party;
- Dependents;
- Direct contributions toward the asset (e.g. mortgage repayments, expenses);
- Indirect contributions toward the asset (e.g. supporting the family while other spouse was at work, emotional support, sacrifices made);
- Agreements between the parties;
- Length of marriage;

There appears to be some uneven bargaining power here. You may be entitled to more than what the solicitor for your ex-spouse is offering. Just note that you may also apply to court for a financial order. Here is some information on financial orders and spousal maintenance.

Also, have a look at the LawAnswers Family Law Forum thread "Husband spent our savings..am I entitled to ask for my half back?" - for what the steps are in a property settlement.