Retail Store dealing with a fraudulent co-owner

Retail store accountant

“This case study covers a client’s journey in the retail industry. We have chosen not to mention their names or business for confidentiality reasons.”

This case study is extremely unusual in that there were 2 owners of a successful retail outlet involving a senior and junior owner. Although there is no such legal process recording seniority – it was purely philosophical, and this occurs in partnerships a lot!

As we had always managed the accounting for the business via the senior partner, we had never spoken to the “junior” owner but one day he rang me saying he had received a winding up notice for the business, which of course was a complete shock, and extremely serious.

What transpired was a criminal prosecution of the senior partner for circumstances he had not shared with anyone, and as a result the business funding had been lost and the ‘winding up’ order for the business issued.

The issues faced by the retail business were significant.

  • Liquidation
  • Loss of Significant Revenue
  • Owner’s relationship termination.
  • Negotiation with Government agency over mandatory breaches.

Our role was to expedite:

  • Deal with the litigious threat to liquidate the business
  • Resolve the unfolding partner conflict
  • Organise the sale/purchase of the business
  • Review the business reporting which had grossly overstated income
  • Transition the business from a corporate partnership to sole ownership
  • Assist the partner litigate the prosecutions.

It is rare to find circumstances such as these, however the final outcome was equitable and achieved the maximum wealth extraction for all parties.

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