Strong-armed over leasehold improvements

[Matt Nolan]

Long story short:

I went into business with some friends (we started a boxing club), and things have gotten sour. We've moved to dissolved, and in doing so plan on liquidating our assets. Here's where things get hairy....

Our landlord is the father of one of my former business partners. He's claiming that things such as the rubber flooring we laid in the gym would fall under leasehold improvements. This flooring is not adhered at all and can easily be rolled up and removed. In fact, some of it was purchased used and we did just that.

My partner is essentially moving to dissolve, and planning on keeping nearly all our assets so he can just reopen in the same spot. He'd retain our clientele and not have to pay me out as part of a sale.

I was under the impression that anything purchased by the gym that could be sold off would be fair game within reason. We installed garage doors and door openers, and I understand that those would clearly fall under leasehold improvements. The rubber flooring though? That seems like a real middle finger.

Any advice would be greatly appreciated!

[Scott Hawley]

In my legal entities with partners, it defines how dissolution happens and how to resolve the assets. What does your operating agreement say?

Also, on your taxes, how was the purchase of the rubber flooring defined? That might help, or hurt, your case.

I'm not sure how much was spent on it, but if you disagree I would try to come up with a reasonable credit and meet in the middle.

Scott