If a partner’s actions start hurting the business, you may want that person out while keeping the company open. That can put you in a difficult position, especially when the other partners still want to run the business together.
In some cases, you can remove a partner and keep the partnership running. Your partnership agreement may include its own removal terms. Florida law also allows you or the partnership to ask a court to expel a partner when specific legal grounds apply.
When a court can remove a partner
Florida law calls a partner’s departure “dissociation” and explains when court removal is available. A court may expel your partner if wrongful conduct has an adverse and material effect on the partnership. In plain terms, the conduct must seriously harm the business.
A court can also remove a partner who intentionally breaks an important term of the partnership agreement or keeps violating it over time. The court can act as well when that partner fails to meet a legal duty to you or the partnership.
Another ground applies when a partner’s business-related conduct makes it no longer reasonably practical for you to keep running the business together. The court looks at what the partner did and how those actions affect the partnership.
What happens after removal
If the partnership continues after dissociation, your former partner loses the right to take part in management. You and the remaining partners can keep running the business under the partnership agreement and state law.
The partnership also has to buy the departing partner’s share when the departure does not lead to dissolution. Florida law sets rules for buying a partner’s share. The calculation uses the greater of the partnership’s liquidation value or its value as an operating business without the former partner, then accounts for debts and other amounts that affect the payout.
Payment does not always happen right away. If the court removal counts as a wrongful departure from a partnership set up for a fixed term or specific project, Florida law generally allows the partnership to delay payment until that period or project ends.
Keeping the business running
Removing a partner can let you keep the business open while ending that person’s management role. You may want to review your partnership agreement and keep records that show what led to the business ownership conflict. Those materials can help you understand the dispute and prepare for any court process.
