Oftentimes, business disputes are an inevitable part of running a business. MBM’s business attorneys will help you resolve your corporate conflict as painlessly as possible. We will guide you through even the most complex mediations, negotiations, amendments, separations, or dissolutions.
- Voting Disputes including deadlocks
- Relationship among co-owners deteriorate
- Dissenting shareholder/member proceedings
- Derivative Suits
- Books and records proceedings (right to inspect/access)
- Oppression or freeze out of minority owners
- Co-owner departs and takes confidential information
- Death
- Dissociation
- Capital calls
- Misappropriation of funds/embezzlement
Preventative Solutions
- Drafting Shareholder Agreements
- Drafting Operating Agreements or Members’ Agreements
- Drafting Partnership Agreements
Dispute Resolution & Litigation Services
- Representing Majority Owners in Litigation
- Representing Minority Owners in Litigation
- Alternative Dispute Resolution – Representation
Attorneys can work with clients to explore and execute strategies and solutions that can eliminate the distraction, expense, and escalation of hostilities that inevitably accompany litigation. Attorneys can coordinate with qualified business and real estate appraisers in connection with buy-out negotiations and appraisal litigation.
INVOLUNTARY DISSOLUTION OF A CORPORATION OR BUSINESS
A judicial proceeding under the applicable statute to dissolve a corporation. In a deadlock situation, a shareholder or director may petition the court of common pleas to order the winding up and involuntary dissolution of the corporation or the appointment of a receiver where all of the following factors are present:
- The acts of the directors, or those in control of the corporation are illegal, oppressive or fraudulent and that it is beneficial to the interests of the shareholders that the corporation be wound up and dissolved;
- The corporate assets are being misapplied or wasted, and it is beneficial to the interests of the shareholders that the corporation be wound up and dissolved; or
- The directors are deadlocked in the direction of the management of the business and affairs of the corporation and the shareholders are unable to break the deadlock, such that irreparable injury to the corporation is being suffered or is threatened as a result.
Also, a corporation may be involuntarily dissolved upon the application of a creditor whose claim has been reduced to judgment if the claim has remained unsatisfied following execution efforts, and if the creditor establishes that the corporation is unable to discharge its liabilities in the regular course of business and is unable to afford reasonable security to those creditors who may deal with it. It must be understood, however, that involuntary dissolution of a corporation upon the application of a creditor is an extraordinary remedy.
What does a Rough Timeline or Outline of the Process Look Like?
Corporations: A petition is filed with the court of common pleas. A petition can request injunctive relief, the appointment of a receiver pendente lite to preserve the corporate assets.
The court will schedule a hearing after notice is given to all parties to the proceeding and other parties in interest. The court may appoint a liquidating receiver with authority to collect the assets of the corporation (a different role than a receiver pendente lite (the temporary receiver).
The liquidating receiver has the authority to dispose of all or any part of the corporation’s assets either at a public or private sale. The assets or the proceeds from the sale are applied to the expenses of the liquidation and to the payment of liabilities, and any remaining assets or proceeds are distributed by the court to the shareholders.
The court may require creditors of the corporation to file proof of claims.
At the conclusion of the proceedings, the court will issue an order dissolving the corporation, and the Department of Court Records (or Prothonotary) will prepare and execute articles of dissolution and transmit to the Department of State. Upon the filing of the articles of dissolution, the corporation’s existence shall cease.
What does a Rough Timeline or Outline of the Process Look Like?
LLC: There are several provisions for the dissolution of an LLC but will explain only those involving a “dispute.”
A member may file a petition with the court of common pleas seeking an order dissolving the company on the grounds that:
(i) the conduct of all or substantially all the company’s activities and affairs is unlawful;
(ii) it is not reasonably practicable to carry on the company’s activities and affairs in conformity with the certificate of organization and the operating agreement; or
(iii) the managers or those members in control of the company:
(A) have acted, are acting, or will act in a manner that is illegal or fraudulent; or
(B) have acted or are acting in a manner that is oppressive and was, is or will be directly harmful to the applicant.
The court may order judicial supervision of the winding up of a dissolved LLC, including the appointment of a person to wind up the company’s activities and affairs.
When all the debts and obligations and other liabilities of the LLC have been paid and discharged, the remaining property and assets are distributed to the members. A certificate of termination is filed with the Department of State.
The following events cause the dissolution of a partnership:
(1) In a partnership at will, the partnership knows or has notice of a person’s express will to withdraw as a partner, other than a partner that has dissociated, except that, if the person has specified a withdrawal date later than the date the partnership knew or had notice, on the later date.
(2) In a partnership for a definite term or particular undertaking:
(i) within 90 days after a person’s dissociation by death or otherwise or wrongful dissociation, the affirmative vote or consent of at least half of the remaining partners to wind up the partnership business;
(ii) the affirmative vote or consent of all the partners to wind up the partnership business; or
(iii) the expiration of the term or the completion of the undertaking.
(3) An event or circumstance that the partnership agreement states causes dissolution.
(4) On application by a partner, the entry by the court of an order dissolving the partnership on the grounds that:
(i) the conduct of all or substantially all the partnership’s business is unlawful;
(ii) the economic purpose of the partnership is likely to be unreasonably frustrated;
(iii) another partner has engaged in conduct relating to the partnership business which makes it not reasonably practicable to carry on the business in partnership with that partner; or
(iv) it is otherwise not reasonably practicable to carry on the partnership business in conformity with the partnership agreement.
(5) The passage of 90 consecutive days during which the partnership does not have at least two partners.