After Happily Ever After, Who Gets The Golden Eggs?

Family businesses have been referred to in divorce cases as "the goose which lays the golden eggs" (N v N (Financial Provision: Sale of Company) [2001] 2 FLR 69) and although the court cannot directly order the sale of a company to fund a party's settlement, such a sacrifice can be the intended and inevitable consequence of the orders made. In what circumstances will the court send the goose to market and what other challenges do company interests often attract?

INTO THE WOODS: THE MURKY REALMS OF VALUATIONS

The value of a business interest, whether as capital or simply an income stream, will be taken into account by the court when considering how to divide the assets fairly. Ascertaining the capital value of a company can be an expensive process fraught with difficulty due to the numerous different but equally subjective ways in which its value can be calculated. However where the company in question is a small family business which provides the main income stream and as such is unlikely to be sold, courts are not always willing to permit a formal valuation to be undertaken.

WOLVES IN GRANDMA'S CLOTHING

It is not unusual for other interested parties to claim an interest in the business once divorce proceedings have been issued, such as the son who declares that his father's shares are in fact held on trust for him (Shield v Shield [2014] EWHC 23) or the wife who asserts that her husband is the true beneficial owner of assets which other family members claim to own (TL v ML and Others (Ancillary Relief: Claim Against Assets of Extended Family) [2005] EWHC 2860 (Fam)). Such issues add a further layer of complexity that requires dextrous disentanglement.

THE FAIREST SETTLEMENT OF THEM ALL

A variety of different factors are taken into account in determining the most appropriate way of dividing the assets on divorce but in the vast majority of cases the most important factor is the need of each party for accommodation and income. The aim in every case is to ensure that both parties obtain a fair settlement which provides for their needs.

In an ideal world there will be sufficient realisable capital in the matrimonial pot to provide for a clean break and immediate financial independence from each other. In reality, this is often not possible and there is persuasive (but not binding) English authority which supports the proposition that in the context of divorce proceedings, a business interest should not be sold simply to facilitate a clean...