In the dynamic world of business, partnerships and collaborations can significantly contribute to success. However, even the most promising business relationships may encounter challenges over time, leading to what is commonly known as a “business divorce.” This term refers to the dissolution of a business partnership or closely held company due to irreconcilable differences among its owners. The experienced New York commercial litigation attorneys at Levy Goldenberg LLP are able to help you navigate through this process.
Understanding Business Divorce
Business divorce can occur in various scenarios, and at any point in a partnership or closely held corporation. Sometimes, a business divorce might be necessary to stop further disputes from happening. Examples of scenarios where business divorce can arise include:
>> Partnership Disputes
>> Shareholder Disputes
>> Breach of Fiduciary Duties
>> Financial Strain
To avoid getting to the stage where business divorce becomes necessary, it is important for partners and members of a closely held corporation to prepare a well-crafted operating agreement. Such an agreement is crucial, as it should address potential areas of dispute and establish clear protocols for handling disagreements and departures. However, business divorce may become necessary if there exists no such agreement or if an existing agreement fails.
Partnership Disputes
Partnership disputes are disagreements between partners on strategic decisions, financial matters, or the direction of the business. Despite having shared goals at the outset of the partnership, partners may encounter these challenges and conflicting interests over time, leading to partnership disputes. Such disputes can lead to deadlock in the partnership’s operations, causing tension on both sides.
Shareholder Disputes
Shareholders are individuals or entities that own shares in a corporation, giving them a stake in the company’s ownership and the right to participate in its decision-making processes. Shareholders in closely held companies may have conflicting views on management, profits, or succession plans, culminating in a need for business divorce. Such disputes are not uncommon in the corporate world, but are inconvenient and costly.
Breach of Fiduciary Duties
Breach of fiduciary duties refers to a situation where a partner or a shareholder in a closely held corporation fails to fulfill their legal obligations to act in the best interest of the partnership or corporation or its other owners. These duties require partners and shareholders to act with the utmost good faith, loyalty, and care toward each other and the business. Allegations of breach of fiduciary duties, such as self-dealing or mismanagement by business owners, can spark disputes that may result in a business divorce.
Financial Strain
Financial strain in a partnership or closely held corporation refers to a situation where the business faces significant financial difficulties or challenges that impact its operations, profitability, and overall financial health. Economic challenges or disagreements over financial matters can strain a business relationship necessitating a separation.
How to resolve Business Divorces
Our experienced attorneys can help you navigate the complex nature of business divorces. Our attorneys explore all available options to ensure the best outcome for our clients. These options include
>> Negotiation
>> Mediation
>> Separation Agreements
>> Litigation Representation
Contact Our Experienced Business Litigation Attorneys in Manhattan
Levy Goldenberg LLP, New York’s leading commercial litigation firm, has an impressive track record representing businesses and individuals in business divorces. Commercial litigation involves complex factual and legal issues, and an unfavorable outcome can jeopardize your business. The best way to protect your interests is to have the informed representation Levy Goldenberg provides. Contact our Manhattan office today to get started with a seasoned commercial litigation attorney.
Levy Goldenberg LLP represents businesses in commercial litigation throughout New York, including Manhattan, Kings, Queens, Nassau, Suffolk, and Westchester Counties.