Lustig & Associates -
Shareholder/Partner Disputes
As the economy gets worse,
many businesses are finding that conflicts between
shareholders and business partners that had been simmering
beneath the surface for years are finally coming to a head.
The previously healthy economy helped to mask those
problems, since there was less of a reason to act on them
while everyone was making money. As a result, such disputes
are becoming more common.
Shareholder disputes and business partner disputes can arise
at any time. Consider that these shareholder and business
partner disputes almost always arise amongst business
partners who once trusted each another. Whether they are
family members, or simply people who once worked together to
build a company, it highlights the fact that no one is
immune from becoming involved in such disputes. |
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And when litigation arises
over a shareholder being terminated, a situation involving
something as sinister as embezzlement, or simply results
from an uncontrollable “power trip” by the majority
shareholders, there is a common theme to all such cases:
Everyone attempts to re-write history.
Sometimes the
“re-creations” are founded in a genuinely-held view of how
things transpired. Other times, of course, people just plain
lie. Regardless of motivation, if you are involved in a
shareholder or partnership dispute, is never too early to
start protecting yourself from revisionist history. Since
things are easier to prove when in writing, it goes without
saying that you should, at the very least, start creating a
paper trail once you sense a showdown on the horizon.
One of the first questions
to ask is whether a Shareholders’ Agreement, or an LLC
Operating Agreement exists. A corporation’s Shareholders’
Agreement or limited liability company Operating Agreement
may contain buy-sell provisions or valuation provisions that
may be relevant, or even dispositive, in any dispute. These
agreements frequently determine the outcome in the event of
death, disability, divorce, termination of employment,
bankruptcy, or the sale of an individuals interest in the
business. Lustig &
Associates has had decades of experience resolving disputes
between shareholders, business partners, LLC members and
joint ventures. We are frequently called upon to provide
counsel and advice to our clients and to advocate on their
behalf in negotiation, mediation, alternative dispute
resolution and litigation in the following areas:
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Breach of fiduciary
duty
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Embezzlement
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Shareholder disputes
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Shareholder oppression
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Self-dealing (pursuing
business opportunities for one’s self that conflict with
the best interests of the company)
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Minority ownership
rights
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Executive
compensation, buyout agreements and buyout rights
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Corporate deadlock
disputes
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Shareholder appraisal
rights
We also have extensive
experience in shareholder litigation including chancery
litigation seeking temporary restraining orders, preliminary
injunctions, permanent injunctions, accounting's,
dissolution and shareholder derivative actions. We have been
successful in having minority shareholders interests valued
by the court and purchased by the other shareholders.
There are many ways to protect oneself in the event of
shareholder disputes or business partner litigation. Call us
to schedule a consultation to see if you can benefit from
our extensive experience in shareholder and partnership
disputes.
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