As a business owner, discovering that your partner is stealing from your company can be devastating. Not only does it jeopardize your financial interests, but it also threatens the stability and future of the business you’ve worked so hard to build. If you’re in this difficult situation, it’s critical to take swift and decisive action. Below are three key steps you can take to protect your company and safeguard your assets.
1. Obtain Immediate Relief Through Temporary Restraining Orders and Preliminary Injunctions
The first step in addressing theft by a business partner is to stop the theft from continuing. One of the most effective ways to do this is by seeking immediate relief from the court. Temporary restraining orders (TROs) and preliminary injunctions are legal tools that can prohibit your partner from accessing or misappropriating company funds. A TRO can be issued quickly, often without prior notice to the other party, to prevent further harm. A preliminary injunction is a more extended order that can prevent your partner from taking specific actions, such as withdrawing money from business accounts or transferring assets, while the case is ongoing. These orders are especially important if you’re concerned that your partner will continue their actions or attempt to hide the stolen funds.
2. Cut Off Access to Company Funds
Once you’ve taken legal steps to halt further theft, it’s critical to cut off your partner’s access to the company’s financial resources. This can include removing them from any business accounts, credit lines, and payment systems that they can access. Work with your bank to freeze accounts if necessary and ensure that only you (or trusted individuals) have the authority to authorize transactions. This may be a difficult step, especially if your business partner holds a significant role in the day-to-day operations, but it’s essential for preventing any further damage. You may also want to consult with a forensic accountant to audit the company’s financial records and ensure you have a clear picture of any stolen funds.
3. Seek Court Approval to Terminate Your Partner’s Ownership Interest
If the theft is part of a broader pattern of misconduct, you may need to explore terminating your business partner’s ownership interest in the company. While this step requires legal action, it may be the only way to fully protect your company and its assets. Depending on the structure of your business, this may involve negotiating a buyout agreement or petitioning the court for approval to remove your partner from the company altogether. Courts can also enforce the terms of partnership or operating agreements, which may include provisions for removing a partner under specific circumstances, such as fraud or theft. Taking this step can provide long-term stability for your business, especially if your partner’s actions already undermined the trust and functioning of the company.
Conclusion
Dealing with a business partner who is stealing from your company is not only a legal matter but also an emotional and financial challenge. However, you don’t have to face it alone. By acting swiftly and utilizing legal tools like temporary restraining orders, cutting off access to company funds, and seeking a court-approved removal of your partner, you can regain control and protect your business from further harm.
If you suspect or have already confirmed your business partner is stealing from the Company, lawyers at Beresford Booth can help. Please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.