[WSBARP] Mechanism for Managing Cash Flow In Midst of Dispute

[Dave Culbertson]

Hi, folks.

Fact Pattern: a business has three partners, they need to work out some kind of a business divorce. But in the meantime it would be in everybody's interest to keep the business running. And nobody trusts anybody else with control of the cash flow from the business. I'm considering what options might exist for staving off litigation.

A certain amount of money flows into a bank account to cover employee payroll, materials, etc. But it was set up so only one partner has access, and now that they are in tension that person doesn't want to provide info to the others, who in turn don't want to rely on that person to manage the funds in everybody's interest. Ideally, there would be something like an escrow account that independently holds the money until the partners are in unanimous agreement on approving payment for expenses, etc. IF such a mechanism exists, maybe they each individually would be confident enough that they could then agree sufficiently on business decisions that they could operate a bit longer till they resolved the thorny issues of how to buy out one of the partners.

One idea is if they could find a third paryt that everybody could rely on,  perhaps they might agree that person would hold the money and only disburse it on things they coul all agree on. Has anyone dealt with a circumstance like this, and/or are there other mechanisms that may have worked to allow mistrustful partners to continue to operate?

(I know a receivership fits this circumstance some, and maybe that's where this will eventually land, but as I said, we are looking for a way to stay out of court so the parties could over the next month work out an agreement ot buy one part out.

Apologies for the somewhat vague request, but I'm looking for ideas to consider..

Best Regards,

Dave Culbertson

The Law Office of Davisson Culbertson
PO 20403
Seattle, WA  98102

Office Line: (425) 252-0300
Cell:  (206) 478-8134
FAX: (866) 867-7796

dculbertson at culbertsonlawoffice.com<mailto:dculbertson at culbertsonlawoffice.com>






Best Regards,

Dave Culbertson

The Law Office of Davisson Culbertson
PO 20403
Seattle, WA 98102

Phone: (206) 478-8134
FAX: (866) 867-7796
dculbertson at culbertsonlawoffice.com<mailto:dculbertson at culbertsonlawoffice.com>

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