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
When you started the company, both shareholders holding a fifty percent interest seemed like a good idea at the time. That way, everything was equal. Neither one of you answered to the other. Neither could be “bossed around” by your business partner. But, if you are reading this article after a Google search, you undoubtedly have learned, probably the hard way, of the potential shortcomings of this arrangement.» Read More
I have previously written on this site about who gets “custody” of the company’s customers in a business divorce. Related to this topic, can employee loyalty become an issue in shareholder divorce litigation?
Many times, it is clear who will remain with the company in the event of shareholder dispute litigation. For example, if a 10% shareholder who has never worked for the company sues for oppression, the suit is not likely to confuse the employees, as it will be viewed as an internal, ownership matter. » Read More
An injunction is when a court orders someone to do something, or not to do something. These can be very difficult to obtain – in some circumstances – and are often not granted when money damages at the end of a lawsuit can make the aggrieved party whole. In shareholder dispute litigation, injunctions are often a critical tool. A court can order the majority shareholder not to take certain actions that would be hard to unwind at the end of the case. » Read More
When two new clients recently came in to have an Operating Agreement prepared for their newly created LLC, they indicated that they had read my website. Since I had experience in litigating shareholder disputes, they wanted to know how to make a “bulletproof” Operating Agreement, so that there would never be litigation if they disagreed over an issue.
We spent a considerable amount of time trying to come up with a dispute resolution mechanism, but they could not agree on a third party to decide any significant disputes if they ever had one. » Read More