Some veterinary partnerships eventually come to an end for various reasons. At times the partners want to transition to a new business entity, such as an LLC. Or, one of the partners may decide to retire and sell their interest to the other partner or partners. In any case, consulting an experienced veterinary attorney about winding down your practice or for learning how to dissolve a partnership is a wise choice.
At Mahan Law, we regularly advise veterinary professionals around the country on partnership dissolutions. We have comprehensive knowledge of partnership agreements and work with clients to create dissolution plans that prevent unnecessary disputes and allow for seamless transitions. You need informed representation if you are considering dissolving your veterinary partnership. Contact our office today for a consultation.
How To Dissolve A Veterinary Partnership
Dissolving a veterinary partnership starts with looking at the partnership agreement, which should include provisions for an exit strategy. If there is no formal partnership agreement, the partners must negotiate the terms of the dissolution. In any event, the partners should create a separation agreement that covers the following points:
- How to determine the value of the partnership and its assets
- The amount owed to each partner for their share of the veterinary practice
- The distribution of the partnership’s assets
- Each partner’s tax and debt obligations
- Indemnification and legal remedies
- Enforcement mechanisms
- Documents to be filed
- Plans for notifying other stakeholders, employees, clients, and vendors
- A timeline for closing the practice
By working with our experienced veterinary attorneys, you can create a separation agreement that protects each partner’s interests and provides for an amicable partnership dissolution.
Legal Requirements To Dissolve A Veterinary Partnership
Legal requirements the partnership must meet before closing the practice vary from state to state. Generally, the partners must take several steps before the dissolution becomes effective. This includes:
- Filing articles of dissolution (or a certificate of cancellation) in the state in which the partnership operates
- Filing additional forms (e.g. a transfer of property report)
- Paying applicable termination fees
Notably, the Internal Revenue Service also has requirements for dissolving a partnership. In addition, a veterinary practice must notify several parties before closing, including clients, federal and state agencies, licensing boards, employees, payors, vendors, and other business associates.
Notification to Clients
The partnership should notify clients between one and three months before the closing date. The notice to clients should include specific information, such as:
- The date of closing
- The name(s) of local veterinarians accepting new clients
- A way to contact the practice regarding questions or concerns clients have regarding the practice closing
- How to obtain medical records
The notice should also be posted at the practice location, and clients who call or visit should receive verbal reminders.
Notification to Employees
A veterinary practice should notify employees about the closing directly and early in the process and incentivize employees to stay until the business is officially closed.
Notification to Entities
The practice must also notify certain federal, state, and local agencies, such as the Food and Drug Administration – Center for Veterinary Medicine and the applicable state veterinary licensing board.
The veterinary practice’s insurance carriers (e.g. malpractice insurer, workers’ compensation insurer) must receive notice. Also, the partners should review contracts to which the veterinary practice is a party, including laboratory services, cleaning services, waste disposal, and leases. If the veterinary practice owns the premises, the partners must determine if it will be sold or leased to another business. Finally, the partners should wind down any remaining dissolution matters, such as:
- Canceling business permits, licenses, and registrations
- Closing partnership bank accounts
- Settling taxes and debts
- Distributing assets and paying buyout amounts according to the separation agreement
How Mahan Law Can Help Dissolve a Partnership
Dissolving a veterinary partnership involves more than reaching an agreement and closing the doors. Negotiating the separation terms, fulfilling the legal and notice requirements, and avoiding liability require sound legal advice and guidance. You can depend on our experienced veterinary attorneys to help you navigate the process, avoid disputes, and protect your interests.
Contact Our Experienced Veterinary Attorneys Today
Failure to properly dissolve a veterinary partnership may result in several legal and financial challenges. The best way to avoid these risks is to consult with the team at Mahan Law. As the owner of a veterinary clinic, lead attorney Anthony Mahan has hands-on experience with all aspects of practice ownership, including partnership dissolutions. When you work with us, we can help you create a separation agreement that best suits your needs and allows you to move on to the next chapter in your veterinary career, whether you are retiring or starting a new veterinary practice. Contact us today to get started.
Mahan Law helps their clients with veterinary practice transitions throughout the United States including the states of Florida, Ohio, Kentucky, and Indiana.