Business Divorces and Indemnity

While dissolving a corporate entity may be complicated, our law firm has the experience to successfully manage the legal details of an impending business divorce. The formal closure of a business, such as a corporation or Limited Liability Company, is a business dissolution. The Articles of Dissolution must be filed with the state to dissolve legally, and the guidelines set up during the business formation must be consulted. Every business is unique and made up of individuals with different financial interests. Consequently, no single solution applies to all business entities across the board. This can be further complicated by many factors, including the size and scope of the business, the entity’s structure, the amount of debt and assets, and numerous other nuances that must be carefully considered.

While each dissolution is unique, common causes for business dissolution include:

Business Disputes:

A business dispute can arise anytime two or more parties cannot agree to the terms of an agreement that has already been signed. Disputes can occur between businesses – vendors and customers or clients and suppliers – and between owners, employees, partners, and/or shareholders. Disputes can be handled through negotiation, mediation, arbitration, or litigation, and the details of the dissolution will ultimately determine which course of action is best. Our attorneys are experienced litigators willing to use the law to its fullest extent to protect our client’s financial interests.

Minority Shareholder Oppression:

Shareholder oppression occurs when majority shareholders act in a manner that is unfairly prejudicial to the interests of minority shareholders. Prejudicial acts the majority may engage in could include refusing to declare dividends and/or attempting to squeeze out or freeze minority shareholders by withholding or blocking important financial information. Other examples of shareholder oppression have even included denying minority owners the ability to enter the premises.

Corporate managers also have a fiduciary duty to all shareholders and may not engage in actions that are prejudicial to the minority. Should this occur, legal action may be the only option available to protect minority shareholders. In extreme cases, it may be necessary to dissolve and wind up the company.

Breach of Fiduciary Duty:

A fiduciary duty is the legal obligation of one party or entity – the fiduciary – to act in the best interest of another party or entity. It is often entrusted with monitoring or managing the finances of a business. The fiduciary is not allowed to profit from their knowledge of information regarding the company. Suppose a conflict of interest has led the fiduciary to take action, resulting in financial losses. In that case, a business owner may take legal action against the fiduciary for breaching their legal duty.

Death of a Significant Business Partner, Shareholder, or Primary Owner

If the primary business owner dies, the business most often loses its ability to continue operating. Employees, managers, and suppliers will all be impacted, and the company may need to be sold or closed.

It is common for one shareholder to run the business and many investors to be uninvolved in day-to-day operations. When an operating partner or shareholder dies, critical knowledge and skill may be lost, and continuing to operate may not be possible. If the business is a corporation, Buy-Sell provisions may allow the other shareholders to buy back the stock and continue operating.

Contact Paul N Jones Law Firm Today

Regardless of why you must dissolve your business, Paul N Jones can securely guide you through the complex legal dissolution process. He has the experience and skill to protect your interests and ensure that no loose ends remain after the closure, which could expose individuals or the entity to potential liabilities. Furthermore, should disputes arise during the dissolution of your company, we can seamlessly transition into representing you in litigation.

He has extensive experience in various industries in Dallas and is available to discuss the details of your situation and determine if we are the right fit for you. We invite you to contact our legal team to discuss the next steps.