Shareholder & Intra-Corporate Disputes
A business divorce can take many forms: partners split up and go their separate ways, majority owners squeeze out minority owners, a key partner dies or leaves on acrimonious terms, or a partner begins looting the company for his or her own personal gain. Even an ironclad agreement governing the parties’ rights and obligations is not enough to prevent conflict. Compounding these situations is the very nature of a failed partnership, wherein family members or close friends now find themselves at odds. And like a failed marriage, these disputes are typically riddled with egos, emotions, and accusations, which often lead to expensive, protracted litigation.
Although the circumstances giving rise to intra-corporate disputes are numerous, many present common themes. Minority owners often allege that those in control of the company breached their fiduciary obligations by elevating their own, controlling interests ahead of the minority's interests. These allegations are typically coupled with allegations of shareholder “oppression,” which courts have defined as encompassing: (i) burdensome, harsh, and wrongful conduct; or (ii) situations where the “reasonable expectations” of a shareholder have been frustrated.
Nearly all shareholder disputes center on one overarching question: what is the business actually worth? This central inquiry implicates complex business valuation concepts, which require an extensive understanding of the business, its financial condition, and the industry in which it operates. Further, the remedies available in minority oppression actions are numerous, with courts often deciding which faction of the disputing parties will get “custody” of the business.
Given this complex framework, one thing is clear: without competent counsel to help navigate the waters in these disputes, the only certainty is uncertainty. At Barton Cerjak, we have extensively litigated many of these cases. We are acutely familiar with the legal agreements at issue in these disputes (e.g., buy-sell agreements), the fiduciary obligations to which owners and controlling shareholders are bound, and the contours of shareholder oppression. With litigation on the horizon, you need a lawyer to bring certainty to uncharted territory, so you can secure your investment. Give us a call today for a free consultation about your rights and obligations.
- Lead counsel for the plaintiff in a multi-million-dollar shareholder oppression dispute concerning his interest in one of the country’s largest independent insurance agencies; following eighteen months of litigation, the case settled under favorable terms to the plaintiff. See McClone v. Brenn et al., Case No. 2018-CV-000203 (Winnebago County Circuit Court).
- Lead counsel for the plaintiff in a shareholder dispute concerning the value of a leading luxury brand; after a four-day arbitration hearing, the panel issued a $5MM arbitration award in the plaintiff’s favor, which was dramatically in excess of the amount proffered by defendants and their experts.
- Represented the plaintiffs in a shareholder dispute regarding their interest in the oldest private ambulance service in the United States; obtained injunctive relief to prevent the defendant-majority from diluting the plaintiffs' stock by issuing more shares during the pendency of the litigation; the case settled thereafter under confidential terms favorable to the plaintiffs. See Baker v. Baker, Case No. 2008-CV-17169 (Milwaukee County Circuit Court).
- Counsel numerous business owners in negotiations to secure pre-suit buyouts of departing shareholders and LLC-members and avoid protracted litigation.