Business Litigation / Shareholder Disputes

With luck and good planning, small businesses can successfully turn into big businesses. Often, the informal agreements which may form the organizational basis for closely held corporations, LLCs, and partnerships create problems when small businesses develop, expand, or, unfortunately, when profitable businesses fall on hard times.

In such circumstances, owner and shareholder disputes arise. A shareholder dispute happens when different shareholders, members, or partners begin to argue over the ownership of their business. Such disputes can occur when one shareholder or member takes advantage of the other who has less of an ownership interest, or when one member or shareholder no longer follows the Operating Agreement or Shareholder Agreement and begins to act unilaterally to the detriment of the business, over the objections of the others.

Sometimes the remedies in such circumstances may be contained within the relevant agreements that just need to be enforced. Sometimes a buy-out may be the best option. A Shareholder Derivative Suit may be required, where a suit is brought by a shareholder on behalf of the company against the officers and directors of the company. Shareholder Derivative Suits may be brought to cure perceived breaches of fiduciary duty, excessive officer compensation, proxy violations, related party transactions (cronyism), misappropriation of corporate opportunities, and corporate waste. Sometimes a suit for personal damages is required, or a suit seeking a court order judicially dissolving the entity itself.

Sometimes, a partnership agreement may be breached where no formal entity has even yet been formed. If a group of people embark on a partnership together for the purpose of forming an entity or accomplishing a business goal, and one or more contribute resources and the partnership later falls apart, the parties who contributed resources may have a claim. Sometimes partners get into trouble solely through the bad acts of their other partners. If your partner, acting within the scope of his apparent authority, receives money or property and misapplies it, you may also find yourself liable for the misapplication by your partner. In any of these scenarios, you may find yourself needing help claiming damages against the erring party, recovering your money from your former partners, or defending yourself as a partner in an entity where one or more of the partners may be being sued.

Worrell, Durrett, Jaynes and Gavrell, P.C. has represented numerous shareholders, members, and partners over the years as they have struggled through disputes while their businesses grew, and sometimes when their businesses collapsed. Visit our Representative Cases section for more information on the firm's work in this area.

If you are caught up in an owner or shareholder dispute because another person is claiming ownership over your interests, or reneging on their previous position concerning a partnership that you were counting on, or abusing their authority within your corporation or LLC, or taking advantage of their majority position to your detriment, contact Worrell, Durrett, Jaynes & Gavrell, P.C. to review your options moving forward.