When you and your business partner started your company, being 50/50 partners sounded like the only fair way to go. After all, you were both putting in the same amount of money. You were both supposed to work equal hours, make the same sacrifices, and provide the same value. But if you are reading this article, chances are that is not how it has turned out. » Read More
One of the most common reasons for a minority shareholder to file “business divorce litigation” is because that minority owner feels left out, pushed out, squeezed out – simply not part of the process in any significant way. Quite often, the minority owner is pushed out for a reason that is not entirely unjustified. But just as often, these feelings are the result of a misunderstanding that has spiraled out of control.» Read More
You likely came across this article if you Googled the term “shareholder dispute.” However, it is just as likely that you Googled the term “business divorce.” One business owner suing the other(s) to be bought out, or some other escape, is often rightly referred to as business divorce because it is analogous to a divorce among spouses in obvious ways. This posting is about the less obvious ways the two types of legal actions are similar.» Read More
Many shareholders contemplating getting a “business divorce” have put up with an intolerable situation for years, because they fear that filing a shareholder oppression lawsuit will somehow make matters even worse. They might be partly correct in the short term. But the long-term gains often outweigh temporary negatives.
For example, one client had been marginalized and sidelined for years from all important company decisions and all company financial information. » Read More
In closely-held businesses in New Jersey with multiple owners, it seems fairly obvious that the more co-owners you can recruit to your side in a business divorce litigation, the better. You don’t need a lawyer to tell you that. However, what is not so obvious is the possibility of recruiting co-owners to your side once the litigation has commenced.
Litigation – especially business divorce litigation – can be quite divisive. » Read More
As I have said many times in this blog, when minority shareholder oppression occurs, the most likely remedy is a buyout. In other words, courts in New Jersey have the power to compel the majority shareholder to pay “fair value” to an oppressed minority shareholder so the victim of wrongdoing is not forced to remain captive as a shareholder in a company that is treating him improperly. » Read More
Minority owners of closely-held corporations (in New Jersey) often put themselves in a position where they are cut off from access to the company’s books and records. When that happens, several things can occur, and few of them are good.
For example, majority shareholders who have unfettered access to the company’s finances often abuse their power by granting themselves impermissible benefits that are not related to their employment by the company, and are not proportionately shared with the minority shareholders. » Read More
In my last post, I addressed the fact that, just because a minority shareholder has gone along with certain practices in the past, his acquiescence will not necessarily be fatal to a shareholder oppression claim. However, that does not mean you should simply go along with something that you fundamentally disagree with, and assume it will have no consequences to you in the future.» Read More