Business Partners Going Through a Divorce | Episode 99

Divorce at Altitude: Business Partners and Divorce in Colorado

In this episode of Divorce at Altitude, Ryan Kalamaya dives into the complexities that arise when business partners go through a divorce in Colorado. He discusses important legal considerations for co-owners of a business, like Eric and Melanie Wolfe, who are not only spouses but also business partners in a software company. Ryan explains the legal implications of how the business should be handled during a divorce and what steps both parties need to take to protect their interests.

Episode Outline

Business Ownership and Divorce in Colorado
Ryan explains Colorado's public policy against co-owning a business after divorce, highlighting how courts address disputes over who gets the business.

Timing and Strategy in Business Decisions
The importance of taking time to think through business decisions during a divorce. Ryan advises Eric and Melanie to avoid knee-jerk reactions when it comes to dividing the business.

Involving Employees and Suppliers
The best practices for managing employees, suppliers, and clients during a divorce. Ryan emphasizes discretion and recommends a business coach or arbitrator to help navigate communication with staff.

Avoiding Personal Affairs Affecting the Business
The impact of personal issues, such as an affair, on the business and why it’s important to refrain from involving employees in personal matters during a divorce.

Transparency in Business Operations
Ryan highlights the importance of transparency in business decisions and advises Eric to loop in Melanie when making key business decisions during the divorce.

Preventing Business Dissipation
The risks of intentionally running down the business to gain an advantage in the divorce and how it can hurt both parties in the long term.

Maintaining Business Records
Ryan stresses the importance of keeping clear business records, ensuring transparency, and keeping an accountant in the loop during a divorce.

Private Judges and Arbitration for Business Divorce
Ryan discusses the benefits of hiring a private judge or arbitrator for cases involving business ownership, ensuring confidentiality and providing more time for critical issues.

What is Divorce at Altitude?

Ryan Kalamaya and Amy Goscha provide tips and recommendations on issues related to divorce, separation, and co-parenting in Colorado. Ryan and Amy are the founding partners of an innovative and ambitious law firm, Kalamaya | Goscha, that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado.

To subscribe to Divorce at Altitude, click here and select your favorite podcast player. To subscribe to Kalamaya | Goscha's YouTube channel where many of the episodes will be posted as videos, click here. If you have additional questions or would like to speak to one of our attorneys, give us a call at 970-429-5784 or email us at info@kalamaya.law.

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DISCLAIMER: THE COMMENTARY AND OPINIONS ON THIS PODCAST IS FOR ENTERTAINMENT AND INFORMATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROVIDING LEGAL ADVICE. CONTACT AN ATTORNEY IN YOUR STATE OR AREA TO OBTAIN LEGAL ADVICE ON ANY OF THESE ISSUES.

Transcript

Ryan Kalamaya (1s):
Welcome to Divorce at Altitude, a podcast on Colorado family law. I'm Ryan Kalamaya each week, along with my business partner and cohost Amy Goscha or an expert, we discuss a particular topic related divorce, or co-parenting in Colorado. In addition, we have created a short series of lessons. It will take you through the legal process of divorce and answer your questions from simple to complex divorce. Isn't easy. The end of a marriage, especially when children are involved, brings a great deal of loss and change. We hope these practical tips and insights will help you on your journey to a new and better life.

Ryan Kalamaya (42s):
This is a how to episode on what happens when Business Partners go through a divorce in Colorado. As many listeners know we have a divorce story involving Eric and Melanie Wolfe. Now let's say that Eric and Melanie are not only just co-parents, but they are also business partners and that they grew a software company during their marriage with Eric as CEO and Melanie as CFO. What happens to that business in a Colorado divorce? Well, there's a couple of different options and this episode is in particular with some just things to consider and some do's and don'ts for Eric and Melanie, or you, if you find yourself in a situation in which you're divorcing your business partner, the first thing you should know is that under Colorado law specifically in re marriage of Paul is a case that stands for the proposition it's against Colorado public policy in order for people to co-own a business or continue to co-own anything after a divorce.

Ryan Kalamaya (1m 41s):
Now that doesn't mean that they can't agree to. It's just that if they get sideways and they go forward with a trial of some sort, then there is going to be an argument as between Eric and Melanie as to who should get the business. So, one thing I caution clients on is don't decide immediately what will happen to the business. Eric and Melanie need to take some time to think about what is going to work for them. They might not agree on the color of the sky or what is best for their children, but they make a great partners in a business, but they shouldn't immediately have a knee jerk reaction as to who should get the business.

Ryan Kalamaya (2m 21s):
What other tips are Eric and Melanie going to consider or should take into consideration when going through a divorce first, they shouldn't drag their employees or suppliers or customers through the divorce. And that is common sense, but emotions generally will come into play. And, but Eric and Melanie should be very cautious on engaging in any sort of arguments in front of employees or letting others know about the divorce that said they might have an obligation to disclose the divorce to lenders or key suppliers and other people, but they should be on the same page. And they might want to engage a business coach or some sort of arbitrator to decide how and when is best to let employees know.

Ryan Kalamaya (3m 9s):
Another thing that Eric and Melanie need to be cautious of is if there is some sort of affair, it is not uncommon for there to be an affair, especially with some sort of employee. And if Eric is having an affair with his personal assistant, Melanie's going to be tempted to bring that to the attention of everyone in the business. And as much as one would understand why she would want to, and emotionally she might want revenge is just not good practice. And it's going to be a distraction for everyone involved, but they shouldn't be involving employees to deliver messages. And no matter how mad they might feel, they need to take into consideration that the value of the business is a marital asset.

Ryan Kalamaya (3m 50s):
That benefits both of them. Another thing to keep in mind is that even if the operation agreement or bylaws say that Eric can make unilateral decisions, or even if he's made unilateral decisions in the past, once you get into the divorce context, Eric should loop in Melanie on key business decisions when he otherwise may not have. And that's just to make sure that we keep transparency and it's going to make things a lot easier for everyone, both Eric and Melanie really need to focus on the business. They need to set aside the divorce discussions and other things, especially with children for some other time and place, but they really need to focus on their business distraction and they need to double down and make sure that they're doing everything possible to maximize the business.

Ryan Kalamaya (4m 42s):
Another word of caution is that Eric and Melanie, or one of them might be tempted to run down the business because they think that there is somehow going to be an advantage, but they need to keep in mind that it is not in their interest. And it could come back to, you know, seriously haunt them in the event that there is a claim of dissipation and that if you had divorced flu, then it could really work against you in the divorce. But Eric and Melanie really do need to keep careful business records. They need to understand what is going on in the business and work together. And, you know, they need to, as I said before, loop in and accountant, they probably need to let their bookkeeper know that there is a divorce, but they need to get on the same page as to who.

Ryan Kalamaya (5m 27s):
And when they tell about what all is going on, final couple points for business owners to consider is that they really are incentivized in a circumstance in which a business is involved to a point a private judge or an arbitrator. Someone that's going to have a little bit more background and time for such a critical issue. And they want to make sure that there's confidentiality. So they likely will want to ask the court to limit access to the court file. So all of various things need to be taken into consideration when business partners go through a divorce, thanks for listening or watching this short lesson on the divorce outs to podcast.

Ryan Kalamaya (6m 9s):
If you found this helpful, please leave a review or share with a friend. It does help for others that are going through or thinking about a divorce in Colorado. If you want to find out more information, please visit Kalamaya law or Divorce at Altitude dot com. That's K a L a M a Y a.law. Remember, this is educational information. It's not intended to be legal advice. Please consult with an attorney about the particulars of your case. We're happy to answer questions. Feel free to give us a call at (970) 315-2365.