Business Control Disputes

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Businesses do not last forever.  And when they break apart, things can get ugly. If you are a shareholder, member or partner in a business that is breaking up, I would urge you to act quickly in seeking legal advice.

The first thing a lawyer will do is read the formation documents to ascertain whether they provide for an orderly dissolution. Carefully drafted dissolution provisions should serve as the framework for a business breakup. Poorly drafted dissolution provisions often lead to more litigation.

If your formation documents do not speak to dissolution, you need to be aware of the following issues. Keep in mind that most internal business disputes occur when a partner or group of shareholders tries to remove a partner to gain financial control.

First,  “control” is the key word. If you are on the outside looking in, you need to make certain you have a voice in the ongoing management of the company. This may require you to seek a restraining order and injunctive relief. This may also require you to seek an accounting and, in some circumstances, the appointment of a receiver.

There are also circumstances where a partner or business associate is siphoning off clients or compromising the intellectual property of a business. Former partners or business associates may have spent weeks or months forming “on the side” relationships with key suppliers and customers. These disputes also require quick, decisive action and emergency relief. This may even require filing a tortious interference claim against the business that is benefitting from these acts.

Business control disputes are emotionally charged and affect your livelihood. Very often they involve something where you have made a deep intellectual and financial investment. You need to find someone who will aggressively protect your interests.

 

 

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