LAW & FINANCE
Your business is our business Joanne Major, successful businesswoman and founder at Major Family Law looks at the complexities of business interests and divorce.
EXPERT VIEW Joanne Major Principle Major Family Law Tel: (01661 82 45 82) Web: www.majorfamilylaw.co.uk Twitter: @majorfamilylaw
inances are always a significant concern for couples who separate. Where previously one couple had one set of household expenses to meet out of their income, post separation there are likely to be two, along with some uncertainty as to the division of marital assets. So what happens when one party’s income is generated by a business that is classed also as an asset? And what if both parties have an interest and/or position within the business? The way that the courts deal with the existence of the business can depend on many factors. In the recent Supreme Court decision in the matter of Prest and Petrodel, the husband was a rich businessman and all of the assets of the family were held in a corporate structure. Although the court observed the protection of the veil of incorporation, it found that the company held the assets on trust for the husband. The court therefore ordered the husband to pay the wife a substantial capital sum based on those assets.
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This is a landmark case that every business owner needs to be advised of when going through a marriage breakdown. When divorcing parties both own shares in a business or are partners, matters can be even more complex. Particularly so, if the company needs to survive and succeed to produce an income to maintain the family’s lifestyle. This is common where the company or partnership can’t be sold to extract the value and neither does it have liquidity to ‘pay out’ one party their share. These types of cases need to be handled by a shrewd and experienced lawyer to ensure that all variables are accounted for. Increasingly in these cases, the family court has started to be transparent about the parties’ finances, asset positions and the process of the case. This means that business owners need to think carefully about dealing with their financial matters in the court arena as this can become a very public affair. Within the last six months, Khoo Kay Peng,
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the Laura Ashley tycoon and Chris Hohn, hedge fund manager, have both been told that the details of their marital breakdown and financial matters will be made public. This is unusual but it could become the norm, with the possibility that in the future the press will be given limited court documents in addition to being at court when hearings are ongoing. In order to avoid the public gaze, parties going through a divorce who want to protect their financial affairs from the public gaze, have access to various non-court dispute resolution processes. At Major Family Law, we are able to discuss the pros and cons of these options including the possibility that arbitration could be an appropriate solution. Family arbitration ensures that if the parties need to appoint a private decision maker, their financial matters will be confidential. Family arbitration is a new process; it provides a binding solution without the need to have a potentially public hearing.