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Ask MHPC Your Own Question
Category: Canada Law
Satisfied Customers: 7
Experience:  Solicitor at Meredith Holmes Professional Corporation
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Our family heating business went bankrupt. We owed the gov

Customer Question

Our family heating business went bankrupt. We owed the gov to much money to ever get out of debt. My husband has had to claim bankruptcy too. There is no way for us to reopen under another name at this point in time.
We decided to give our long time employee and friend the customer list and phone number of the now closed business. (1 week ago was last day). He got good pay and health plan, but no retirement plan. (we dont have on either) We felt this was an extremely good gift in leiu of losing his job (he's 51, we are 51 and 47, plus my 69 year old MIL) and never having a retirement plan. It was loosely agreed he and another employee would run things and my husband just wanted to be employed (tired of stress). This was talked about right on the day we closed, and the day after a bit.
Now that the dust has settled, and the shock is wearing off, im thinking that maybe we should be asking for a little bit of a stake in the business he is forming. Our customer base took 43 years to grow, we have an excellent reputation, and handed over about 5,000 customers who have no heating company at the moment, are letting use our old phone number, so people will still call for service. We were sooooo busy, but could not get out of the hole due to heavy fines on unpaid taxes. He is opening under a new name.
What do you think would be a fair stake to ask for? Im not thinking a lum sum of money, no one has that. I think its been opened as a partnership and will eventually become incorporated. (we used to be incorporated. Our gross sales last year were 1.4 Million) What about asking for a share of the company? If they succeed, we get a portion of the profit. I was thinking 5-10 % was an appropriate amount. My MIL say 25%. I dont think a business could do well handing over 25% of its profits.
What do you think is a good way to have a piece of the pie, which I think we deserve. And what is a percentage you think would be appropriate?
Thank you,
Submitted: 1 year ago.
Category: Canada Law
Expert:  MHPC replied 1 year ago.

Julie, Generally the goodwill (customer lists, phone numbers, etc) of a business has a value, often a formula such as 3 times the last year's annual net profits. Once that value is figured out, you sell that to your bet employee and make the payments over time. What did the bankruptcy trustee say that the business was worth when the bankruptcy filing happened? Make sure that the bankruptcy trustee doesn't own the business right now!

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