Jeonju Civil Litigation Attorney Case | Assistance Recovering the Full Settlement Amount of About 30 Million Won in a Partnership Relationship

1) Because the partnership's term was set at two years, a member cannot withdraw at will.

2) The members agreed to waive any claim for a settlement amount in the event of withdrawal within two years.

3) Upon withdrawal, the partnership assets subject to settlement are limited to the deposit and the common funds.

4) The deposit is subject to settlement only when a member withdraws after two years have passed.

Through these assertions, the defendants intended not to pay the client any settlement amount.

In the end, this was a case that legally required a liquidation procedure following the termination of the partnership agreement.

To terminate a partnership agreement, the liquidation procedure must be carried out through mutual agreement or formal written notice.

However, depending on the residual value of the business, the actual liquidation amount after a partner's withdrawal may be less than the amount invested.

This is because, under Article 719, Paragraphs 1 and 2 of the Civil Act, the partnership assets must be valued based on the state of the partnership assets at the time of withdrawal, and the amount corresponding to the withdrawing member's share must be returned in money.(See Supreme Court Decision No. 2008Da41529, September 25, 2008, among others)

Article 719 of the Civil Act (Calculation of the Share of a Withdrawing Partner)

(1) The calculation between a withdrawing partner and the other partners shall be made based on the state of the partnership assets at the time of withdrawal.

(2) The share of a withdrawing partner may be returned in money, regardless of the type of that partner's contribution.

The attorney analyzed the partnership agreement to verify the defendants' assertions.

As a result, the partnership agreement said to set the partnership's term at two years did not even bear a signature or seal, and it had not been notarized.

Moreover, the attorney pointed out that this agreement, which was claimed to contain a waiver of the settlement amount claim, in fact stated that "upon resignation, the deposit and 1/N of the common funds shall be paid," showing that it provided for the payment of a certain settlement amount upon withdrawal.

With the attorney's assistance, it was possible to obtain testimony from a witness who had withdrawn from the partnership and recovered the full amount of the contribution before the partnership began operating this business.

The witness testified that "the two-year period written in the partnership agreement was simply meant to express a commitment to work well together during that time."

The witness also testified that, at the time of the witness's own withdrawal from the partnership, no one raised an objection on grounds such as withdrawal within two years.

For this case, the attorney analyzed the obtained record of the initial investment settlement and three months of sales files.

At the point when the client sought to withdraw from the partnership, the partnership's sales were gradually beginning to come in, yet the defendants asserted that only 6 million won remained in the business account.

Contrary to this, however, the amount remaining in the account at the time the partnership was dissolved was 13 million won.

In addition, an appraisal was conducted to make an accurate claim for distribution of the remaining assets following withdrawal from the partnership agreement.

Because the client withdrew within two months of the opening, the partnership's assets at the time had been used for facility investments such as interior work and heating and cooling systems.

Accordingly, an appraisal of the subject property (all interior facilities and equipment within the business) covering the interior fixtures, furnishings and equipment, and inventory assets proved that the joint property value of the contracting parties amounted to approximately 107 million won.

Therefore, since the partnership's net assets of approximately 120 million won remained, the attorney emphasized that approximately 30 million won, corresponding to 25% of this, was the plaintiff's share and urged that it be returned.

Thanks to the attorney's oral arguments, the client was able to recover the full amount that was owed.

If you have confirmed that a business cannot continue, or you are in a situation where it is difficult to work together because of conflicts of opinion among partners, you may consider terminating the partnership agreement.

However, as with the client in this case, if the other side refuses to pay a settlement amount on unjust grounds, a legal dispute through civil litigation or other means can easily arise.

In such a case, retaining a legal professional such as a civil litigation attorney can help resolve the matter quickly and accurately.

Our firm can assemble a task force of attorneys who have handled many such cases, including claims for agreed sums concerning the distribution of profits among partners and lawsuits for the return of jointly invested contributions among partners.

If you wish to bring a financial dispute to a close with a clear return of the settlement amount, we recommend arranging a consultation with an attorney at any time through our firm's 🔗Civil Attorney Referral.