Dissolve or dissolve a partnership or general partnership

A general partnership or VOF is a special form of the partnership. The provisions about the partnership are found in book 7A BW, the provisions on the VOF in the Commercial Code. There, the VOF is defined as a partnership to carry on a business under a common name. The word ‘firm’ in the term ‘partnership,’ means ‘trade name‘.

Terminate partnership or limited liability company

Like the partnership, the VOF can be dissolved by notice given by one partner to the other partners. If a VOF is dissolved, the assets of the VOF must be divided and liquidated. This can be done in several ways. Sometimes the remaining partner or partners continue with the business (continuation) and buy out the retiring partner. Alternatively, the company may be split up or even liquidated and the proceeds divided.

Continuing company VOF after dissolution

The continuation of the VOF's business by one or more partners after it has been dissolved does require agreement between the partners. And this is often a pain point for the exiting partner. This is because there is often already a dispute, after which the departing partner sees how the business will continue without him. Moreover, discussions then often arise about the compensation to be paid by the continuing partner or partners.

Valuation of VOF in case of demerger

Valuing a VOF is often complex, as is the question of What share to each partner due. For if the share of each of the partners is not specified in the partnership agreement, then everyone's share in principle proportional to his contribution. In addition, the reference date is often a point of discussion. Especially if there are negotiations over a somewhat longer period about whether or not to continue the business and the question of how (and with which partners) this should be done. Accuracy of the final statement of the partnership or VOF is therefore also very often fodder for discussion.

Real estate in the VOF

A complicating factor in unbundling an VOF is often when real estate is present. The partners then usually acquired the property jointly in their capacity as partners of the VOF. If the VOF is dissolved, often the common ownership of real estate be distributed.  

Lawyer to divide and dissolve a general partnership

It is therefore wise to seek proper legal advice when dividing and dissolving a general partnership. For this purpose, the partners can hire a lawyer together to advise them, or each can hire their own lawyer. For division and dissolution of the general partnership the lawyer corporate law of Lexys Lawyers would be happy to assist you.