When majority owners of a closely-held business engage in conduct that constitutes shareholder oppression, it comes in all shapes and sizes. One wrongful act that seems to be occurring more frequently is the creation of a competing company that excludes one or more minority shareholders. » Read More
There appears to be an uptick in the filing of meritless corporate shareholder and LLC member oppression claims in New Jersey. Not everything that majority shareholders do that upsets a minority owner is worth spending legal fees to pursue.
When the only allegations one can make are a failure to keep an absentee shareholder fully informed of all business transactions, and a failure to obtain that minority shareholder’s consent to such transactions, that alone is rarely a recipe for successful litigation. » Read More
Years ago, oppressed minority shareholders in New Jersey corporations had more protection than oppressed members of a New Jersey LLC. When the statute was revised in 2014, that changed, and LLC members now have similar remedies available to them. But there is one little-known section of the New Jersey LLC statute that makes it a more powerful tool for the majority owners than the corporate statute – the ability to “dissociate” a member. » Read More
Since litigation is so expensive, when a shareholder dispute arises, talks about the minority shareholder being bought out often happen before attorneys even become involved. Often a client will come in with an offer in hand, or even a fully negotiated deal, asking for me to “write it up.” But what happens if you only have a handful of the documents necessary to value the company? » Read More
I have previously posted on this blog in the past about how the termination of a minority shareholder’s employment can constitute minority shareholder oppression in New Jersey, possibly entitling the minority shareholder to a buy-out. This is based on the theory that an owner of a small, closely-held business reasonably expects employment as long as he is a shareholder. » Read More
Many clients who come in to discuss a possible business divorce action are already anticipating obstacles to their own case. Having a foresighted, prepared client is wonderful. But when those clients take matters into their own hands before even coming into my office, sometimes they have harmed more than helped their own case. » Read More
Many business divorce cases start because one partner is improperly taking money from the business. Such behavior can come in many different forms, including a majority shareholder wildly overcompensating himself, running personal expenses through the business, or having family members on the payroll with a no-show job. » Read More
No matter how many times I write about disputes between business partners, and how many times clients tell me their horror stories, I remain amazed by the ease with which some major business divorces could have been avoided. Most of the time, when a shareholder dispute could have been averted, it is because one of the parties just needed to listen to the other. » Read More
Not surprisingly, business divorce litigation can be quite costly. Whether this cost is “worth it” is not always so easy to figure out. If a minority shareholder or LLC member in New Jersey has an interest valued at $600,000, spending $50,000 – $100,000 in legal fees may be warranted to achieve a buy-out. » Read More
David C. Roberts, a Member of law firm Norris McLaughlin, P.A., will co-present “Anatomy of a Corporate/Business Divorce” with Hubert Klein of EisnerAmper, LLP, on Thursday, June 21, at the National Association of Certified Valuators and Analysts (NACVA) and the Consultants’ Training Institute’s (CTI) 2018 Annual Consultants’ Conference to be held June 20-22 at Caesar’s Palace in Las Vegas. » Read More
