Partnership & Shareholder Disputes

Most closely held businesses in New Jersey begin with a handshake and a shared vision. The trouble usually starts years later, when the partners disagree about money, control or direction and discover that the operating agreement, shareholder agreement or partnership agreement does not clearly answer the question in front of them. By the time an owner calls a lawyer, the relationship is often already strained, distributions may have stopped, and one side may be locked out of the books or the bank accounts.

Mark A. Fantin has spent more than two decades helping owners of corporations, limited liability companies and partnerships work through these conflicts. He has represented minority owners who were frozen out, majority owners dealing with a partner who is self-dealing or refusing to perform, and equal owners in a deadlock that threatens the business itself. Because he also handles business formations, buy-sell agreements and acquisitions, he understands how these companies are built and where the pressure points are when they come apart.

Owner disputes take many forms, and the right strategy depends on the entity type, the governing documents and the business realities. Common matters include:

• Minority shareholder oppression and freeze-outs, including exclusion from management, termination of employment and withholding of distributions
• Breach of fiduciary duty claims against directors, officers, managing members and general partners, including self-dealing and usurped opportunities
• Deadlock between 50/50 owners and disputes over corporate control and voting
• Enforcement and interpretation of shareholder agreements, operating agreements, buy-sell provisions and restrictive covenants
• Valuation disputes in forced buyouts and dissociation proceedings
• Judicial dissolution, expulsion of a member or partner, and appointment of a custodian or receiver
• Accounting actions and demands to inspect books and records
• Disputes among family members in family-owned businesses, including succession conflicts

New Jersey is one of the more protective states for minority owners of closely held companies. The New Jersey Business Corporation Act allows a shareholder in a corporation with 25 or fewer shareholders to seek relief when those in control have acted fraudulently, illegally, mismanaged the company, abused their authority or acted oppressively or unfairly toward the minority. Courts can order a buyout at fair value, appoint a custodian or provisional director, or, in the most serious cases, dissolve the corporation.

The Revised Uniform Limited Liability Company Act gives LLC members comparable tools, including the ability to seek dissociation of a member, judicial dissolution when it is not reasonably practicable to carry on the business, and claims for breach of the duties of loyalty and care. Partners in general and limited partnerships have their own statutory and common-law rights. Because these remedies are powerful and sometimes irreversible, courts expect a careful, well-documented presentation of the facts. Mark builds that record from the outset.

Not every owner dispute belongs in a courtroom. Many are resolved through a negotiated buyout, a restructured agreement or mediation, and Mark works to find that path when it protects the client’s interests. When litigation is necessary, he has the trial experience to pursue it, including emergent applications for injunctive relief to stop a partner from dissipating assets, transferring accounts or diverting customers while the case proceeds.

Larger and more complex owner disputes in New Jersey are frequently assigned to the Complex Business Litigation Program, which places qualifying commercial cases before judges dedicated to business matters. Mark regularly follows and analyzes decisions from that program, and he brings that current knowledge to every matter.

Mark practices from Montclair in Essex County and represents businesses and owners throughout New Jersey, including Morris, Bergen, Union, Passaic, Hudson, Somerset and Middlesex counties, as well as clients in the New York metropolitan area.