Help professionals • Realize partnership assets and settle debts • When is arbitration required? • "Israel Today" brings the highlights and tips to streamline the complex process of the Corona

• All answers to questions about a business closing process

  Photo: 

  Joshua Joseph - Illustration

Unfortunately, due to the severe economic crisis caused by the spread of the Corona in Israel, many businesses may find themselves facing closure. "Israel Today" concentrated the answers to the essential questions that deal with the complex process, with a view to making it easier for business owners to make the move.

We decided to close. What now?

Use professionals - this will save quarrels between business partners. The partnership dissolution process has legal aspects and significant implications for the partners' obligations and rights in the partnership. Therefore, it is advisable to consult appropriate professionals. Knowledge and professional experience may mitigate the damages involved in partnership closing. In this process, trust between partners is very important, so it is important to choose consensual professionals.

The sense of promiscuity in the business in preparation for closure can lead to wasteful resources, which are very necessary to close, or properly dismantle the business. It is precisely during this period that strict management is important. If you are unable to do this alone, it is advisable to appoint a professional to a liquidator, trustee, special manager or receiver who will act to disburse the partnership assets.

What happens if one of the partners decides he doesn't want to break up the business?

A decision to dissolve a partnership can be made with the full agreement of all the partnership partners or with a partner's announcement of his desire to disband the partnership, all in accordance with the terms of the partnership agreement. In the absence of consent, where one (or more) of the partners do not agree to dissolution of the partnership, the court may be called to order the dissolution of the partnership, if one of the conditions stipulated in section 45 of the Partnership Ordinance is met. Of course the best way, and the one that leaves the least precipitation, is to close the business with the full agreement of all the partners, so that the proceeds obtained from the realization of the partnership assets can also be maximized. Of course, you can also offer a partner who wants to stay in the company to "buy" their share of the other partners.

Why are the partnerships in no hurry to distribute profits after the liquidation?

Once a decision has been made to dissolve the business, action must be taken to realize the partnership's assets and at the same time to settle the partnership's debts and liabilities - to employees, authorities, suppliers, service providers, landlord and the like. Only after the settlement of all partnership obligations and the closing of the partnership portfolios will the remaining partnership assets be distributed among the partners, according to their relative share of the partnership rights. The distribution of profits before repayment of the full liabilities can expose the partners to personal claims.

We are childhood friends who started a business without having a written agreement and now we have to break it up, even though we have disagreements. What to do?

Of course, it is best to reach an agreement between you. Professionals can be helped to reach agreements, such as a mediator, business consultant and expert on the matter. You can also decide on arbitration and appoint an arbitrator you agree to, or as a last resort to contact the court to decide the disagreements.

What happens if I have a financial credit to the closed shop?

In such a case the store owner should come to an understanding with the creditor. The credit in effect and in effect holding it may be sued. It is advisable to try to reach an understanding with the customers. If the closed body is an empty company out of them, the winner will not be disrupted.

Last year I had profits, and this year's losses led to the business being closed. Can I get a tax refund I paid for previous years' earnings?

No. Losses you accrue can only be offset for future earnings.

Assisted in providing answers: Attorney Eli Doron, Expert in Corporate Law, Taxation, Banking and Insolvency Law, Partner in the Office of Adv. Doron, Tikotsky, Cantor, Gutman, Ness, Amit Gross & Co.