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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.

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, trademark, 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:

  • Breach of fiduciary duty

  • Embezzlement

  • Shareholder disputes

  • Shareholder oppression

  • Self-dealing (pursuing business opportunities for one’s self that conflict with the best interests of the company)

  • Minority ownership rights

  • Executive compensation, buyout agreements and buyout rights

  • Corporate deadlock disputes

  • 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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