Often times spouses co-own a business or businesses and find themselves going through divorce. Both spouses work daily at the business, each in a respective role to ensure the smooth running of the business.
But what happens in the case of a litigated divorce? Do both spouses continue to come to the same workplace each day while going through a contested divorce? What about the business accounts and paperwork generated each day at the business? What if one spouse locks the other out of important business accounts which affects his or her ability to have access to important information needed for the business and for divorce litigation? How do divorcing spouses continue to work together to make a business thrive with dueling interests and now dueling personalities?
These are just some of the complexities that a Family Court Judge must examine during the pendency of the case and at a trial. All these facts make a joint spouse owned business very complicated.
However, the first and foremost important consideration for any Judge is the parties’ status quo leading up to the filing of the divorce action: how were the parties operating and what were their historic roles in the business prior to the filing? The Court always tries to fashion a remedy to maintain what the parties were doing prior to litigation as much as possible to ensure the proper operation and function of the business during litigation. It is always the Family Court’s job to try to preserve and maintain marital assets and income derived from a family-owned business.
But what happens if a spouse is attempting to sabotage the overall health of the business? This may include engaging in intolerable behavior designed to adversely affect the client base, wrongful removal of funds from the business that affects the bottom line, or other behaviors that adversely affect the business.
In this situation, a hearing can be requested to address the conduct. The Court can order that funds removed be replaced or require certain restrictions on the spouse’s ability to work at or have access to the company records. This may include restraining orders prohibiting a spouse from coming about the business during certain working hours or other restraints.
In sum, it can be very difficult for spouses who co-own a business to continue to operate as they were prior to the onset of litigation. While the Court will aim to maintain what the parties were doing, this is not always possible so that the Court must issue orders designed to protect the overall health and well-being of the business during litigation.
