“Dear Stan,
We’ve been negotiating with a current partner to spin out a business entity from the partnership as our separate ownership. It’s a segment of our joint business activities that is no longer congruent with the partner’s mission and is also incompatible with their business practices. We agreed in principle to do so last December, and had been working together pretty well towards a June 30th separation date. We created the separate legal entity, drafted a separation agreement that seemed to be acceptable to all parties, notified our customers and began receiving advanced orders and deposits against shipments due after July 1st. About two weeks before the separation date, our partner suddenly came to us with a new set of financial reports that essentially said we owed them a lot of money for activities prior to the separation date. The amount that they said we owed, oddly enough, was almost exactly equivalent to the sum of our advance order deposits. We don’t believe we owe the amount they claim, but are uncertain as to whether or not to move ahead. What would you advise in this situation?
Signed,
Chain Yanked in San Diego
Dear Yanked,
