Business debt is the money accrued by a business that is owed to any number of parties, such as an individual, lender, or the government. All types of businesses can accrue debt, whether they are owned by an individual or have a board of directors.
However, if a business is a general partnership, things may be a bit different. In a partnership, two or more individuals share every asset and every debt in the business. The debt belongs to both of the partners, and they will be liable for the debt.
However, some choose to agree that only one partner is responsible for the majority of the debt. In addition, any of the partners may be liable for the entire amount of the partnership debt so that if there is one partner with little money, creditors may seize the money and or assets of the other partner to pay off the debt.
Partners may seek reimbursement under the partnership agreement from the partner that was unable to pay their portion of the debt. We recommend consulting with an M&A attorney in Miami before doing so.
If a business cannot pay off its debt, the business may try to negotiate an agreement with the creditor, which is what a settlement agreement is. Businesses may also choose to use alternative dispute resolution such as mediation or arbitration. Be mindful that while arbitrations are binding, mediations are not, therefore, parties can still pursue other ways to settle the debt.
If you have questions about disputes for your business’ debt, contact our corporate law firm in Miami.