When business owners can no longer work together or disagree about how the company should be operated, the company’s operations, assets, and longevity can be threatened. What begins as an internal conflict can quickly escalate into litigation involving claims of financial misconduct, disputes over ownership interests, or efforts to force a buyout or dissolve the company.
If you believe your business relationship is breaking down, it’s crucial to have the representation of an experienced business litigation attorney to protect your rights and determine the best path forward. A business litigation attorney can play a critical role in safeguarding your interests during a business divorce by:
1. Reviewing the Governing Business Agreements
One of the first steps in a business divorce is determining what agreements govern the business relationship. A business litigation attorney can carefully review the company’s operating agreement, shareholder agreement, employment agreement, or other governing documents to determine the parties’ rights and obligations. These agreements may address ownership interests, voting rights, management authority, buyout rights, valuation procedures, deadlock, and dissolution. The language in these documents may ultimately determine whether one party can force a buyout, seek dissolution, or take other action.
2. Investigating Financial Misconduct and Breach of Fiduciary Duty
Business divorces frequently involve allegations that one owner misused company assets or otherwise acted improperly. For example, a business owner might claim that a co-owner diverted business opportunities, made unauthorized payments, concealed financial information, or used company funds for personal benefit. Depending on the facts and circumstances of the case, these allegations may support claims for breach of fiduciary duty, fraud, conversion, and other legal claims.
A business litigation attorney can diligently review the evidence that is often uncovered in these matters, such as bank statements, tax documents, contracts, communications, and financial transactions involving the parties. By analyzing these records, an attorney can help determine the strength of a claim and develop an effective litigation strategy.
3. Obtaining Access to Business Records
A business owner may become concerned when a co-owner refuses to provide access to financial or corporate records. Without this information, it can be difficult to determine whether company assets are being properly managed or financial misconduct has occurred. A business litigation attorney will know how to obtain the relevant records and what measures to take if information is improperly withheld.
4. Negotiating a Buyout or Business Separation
In a business divorce, the parties ultimately determine that they can no longer operate the company together. One owner may seek to buy out the other, or the parties may agree to sell the business and divide the proceeds. Notably, negotiating a buyout can be complicated when the parties disagree about the value of the business, the value of each owner’s interest, the treatment of company debt, and any alleged financial misconduct.
A business litigation attorney can help negotiate the terms of a buyout or other business separation agreement and ensure your legal and financial interests are protected. In the event an agreement cannot be reached outside of court, they can assist you in pursuing the remedies potentially available in litigation.
5. Seeking Emergency Relief to Protect the Business
Some disputes that lead to business divorce require immediate legal action to prevent further harm to the company or an owner’s interests. For instance, one owner might attempt to transfer company assets, destroy financial records, divert customers, or take other actions that could damage the business before the dispute can be resolved through ordinary litigation.
A business litigation attorney can evaluate whether emergency court intervention, including a temporary restraining order or preliminary injunction, might be appropriate under the circumstances. They can help gather and present the necessary evidence to demonstrate the risk of irreparable harm and seek appropriate relief to maintain the status quo while the dispute is pending in court.
6. Advising You Regarding Your Legal Remedies and Representing You in Court
Not every dispute in connection with a business divorce can be negotiated outside the courtroom. A business litigation attorney can assess the facts of your case, explain the legal remedies that are available, and advise you regarding the best strategy for moving forward. Depending on the circumstances, this may involve pursuing claims for damages, challenging a co-owner’s misconduct, enforcing ownership rights, pursuing a buyout, or seeking dissolution of the business.
If litigation is necessary, an attorney can advocate for your position and pursue or defend against claims involving ownership rights, management authority, fiduciary duties, and financial misconduct. Retaining an attorney early can help ensure your claims are properly evaluated, important evidence is preserved, and your interests are protected throughout the litigation process.
Contact an Experienced Long Island Business Litigation Attorney
If your business relationship is deteriorating and a business divorce is imminent, it’s essential to have a skilled business litigation attorney by your side to ensure your rights and interests are protected. At Barnes & Barnes, P.C., we offer trusted representation for a wide range of commercial matters across Long Island, including those involving business divorce. Contact us at (516) 673-0674 to schedule a consultation and learn how we can assist you.
