As featured in the latest edition of the QHA E-Update
Disclosure
Disclosure is an essential step in resolving a party’s financial matters in a family law dispute. Its purpose is to identify the net assets that make up the property pool available for division. For hoteliers, the hotel business itself is often the single largest and most complex asset in that pool, so getting disclosure right matters more than usual.
We have answered some commonly asked questions that hotel owners and operators may have regarding their obligations to disclose and what the implications are if there is a failure to provide that disclosure.
What is the duty of disclosure?
In a family law dispute, you and your former spouse each have a duty to provide the other with all information that is relevant to the issues in the case and to the matters that remain in dispute.
What do I have to provide?
In financial cases, there are specific rules about full and frank disclosure. This disclosure must be of the party’s direct and indirect financial circumstances.
For a hotelier, this typically extends beyond personal bank statements and tax returns to the hotel’s financial statements, management accounts, and point-of-sale or booking system reports, as well as liquor licensing, lease or freehold title documents, loan and supplier agreements, and any information about the disposal of business assets before or after separation that could affect, defeat, or reduce any claim.
How is my hotel valued?
A hotel is usually valued as a going concern, combining the value of the real property with the value of the business itself, most often assessed on a capitalisation of future maintainable earnings. Goodwill in a hotel is generally treated as commercial goodwill, tied to the location, liquor and or gaming licences, brand or trading name and clientele, rather than personal goodwill attached to you individually, which means it is more likely to be treated as property available for division. An independent, appropriately qualified valuer with hotel or hospitality experience should be engaged to ensure the figure withstands scrutiny.
Why is it important I disclose?
It is important that you comply with your disclosure obligations as it crystallises the asset pool, ensures that the financial position of you and your former spouse is accurate, and allows you to resolve the matter efficiently. For a hotelier, proper disclosure also helps keep the focus on running the business, rather than on disputes about its value.
If you need help getting started with providing your disclosure, beginning the pre-action process, or understanding what you are required to disclose as a hotel owner or operator, our Family Law team is here to assist you.
Call us on 07 3224 0222 to book an obligation free consultation.
