Business debt inheritance

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Reuben321

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My elderly mother has inherited a debt owed to my father from his business which is a partnership. He always said he was owed money that he wasn't taking because the business did not have it at the time.

My mother has contacted the accountants who said they cannot give her the details on the debt because they need the authority of the other partners first . Is this correct ? Would she not be entitled to details of the debt anyway?

She is also wondering how she can recover the debt , particularly if the partners say that they cannot pay it. If the debt is small she may just leave it bit she would like to know what she is owed and the questions she should be asking the business/ accountants.

Any advice would be appreciated.
 
What does her/your solicitor say?

As they would be fully informed of all the details, they should know what steps need to be taken to recover the debt.

Brendan
 
The first question to ask is there a partnership agreement? A well drafted partnership agreement would address issues such as what happens upon the death of a partner, valuation of the business at the time, whether the partnership dissolves or not etc. You need to establish if the personal reps of your Dad's estate steps into the shoes of your Dad in the partnership.

If there is no partnership agreement, then the provisions of the 1890 Partnership Act kick in.

You should establish if the partnership had an independent accountant. Such an accountant would have a duty of care towards your Dad. In this case it does seem that there are independent accountants involved. The pragmatic way forward is for your mother to send a copy of the grant of probate to the remaining partners and ask them to authorise the accountants to release the required information.

If the partners are unwilling to pay the monies due to the estate then, subject to the terms of any partnership agreement, your mother could apply to the High Court to have the partnership dissolved and the assets distributed.

Hopefully the other partners will not try and take advantage of the situation.

Jim Stafford
 
Should the OP not just contact their late father's former partner(s) and try and work from there?

If the business couldn't manage to sustain repayment of the debt during his lifetime, things may not changed radically in the meantime but you never know...
 
Thank you for your replies. I am very grateful..There is no written partnership n agreement. The other partners are relatives which makes it awkward.

She has asked the other partners a few times about the debt and just gets vague answers. That is why she approached the accountants and they said they need authority of the partners. Unfortunately, one of the other partners is also the Executor of the Will so that makes it more difficult as well. She is not happy because she just wants to know what debt amount is involved and she can then make a decision. She may forget about it if it is small but if it is significant, she will want to consider her options. The other partners had been paying her 2k a month up to recently but now only pay her €500 a month due to financial constraints (they have said they will increase it but this may never happen) and she is concerned because she was relying on this payment and would like to know where she stands and have she transparency on the debt.
 
As advised above, if there is no partnership agreement, then the provisions of the 1890 Partnership Act kick in. In this case, the partnership should have been dissolved upon the death of your Dad. The partners are obliged to full accounts to each other. The partnership's accountants should prepare Cessation accounts and make the necessary tax returns to Revenue.

It seems to me that the Executor has a Conflict of Interest and could be removed, particularly if the partnership is "material" to the estate.

Perhaps a stiff letter to the Executor reminding him of his duties might put him back on the right path?

Transparency is critical in these types of disputes.

Jim Stafford
 
Thank you. Yes, my mother just wants transparency. There may be no money to pay the debt but she would like to know the amount and where she stands with it The Executor is a relative so she will not want to cause huge conflict but perhaps a formal request for access to the accounts details may be sufficient.
 
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