Corporate Divorce – The Importance of Prompt Damage Control

When good companies fail due to deteriorating business relationships, there is often a cast of familiar players:

1. The “Founder” – someone who has grown the business from the ground up and who may want to buy his/her partners out at whatever cost;

2. The “Silent Partner” – often the financier/backer, but occasionally also the partner who wants more of a say than was first contemplated;

3. The “Cheat” – the person who has been less than honest with his/her partners about the business opportunities he/she is pursuing and the income that he/she has been generating on the side;

4. The “Heart and Soul” – the person who is the business and without him/her the business would be worthless.

Business relationships can break down for a variety of reasons but more often than not it results from a break down of trust. One example is when it is discovered that one business partner has been diverting business to another related entity which he or she has a vested interest in and has not disclosed to the other business partners. Another example is when the shareholders of a business allege that the affairs of a company are being conducted in an oppressive manner.

Obtaining early and strategic legal advice can stop the business relationship break down from snowballing out of control. There are a variety of options available for strategic resolution despite the variety of personalities involved including the Oppressive Conduct of the Affairs of a Company procedure in the Supreme Court which is aimed at facilitating the “just, efficient, timely and cost-effective resolution of the real issues” in disputes involving the oppressive conduct of the affairs of a company.

Rob Oxley, Commercial Litigator of Tisher Liner FC Law has significant experience in advising clients experiencing a business relationship break down with strategic and practical advice that protects what our clients have worked hard for – their business.

For help with your business law issues, please contact a member of our Business Law or Dispute Resolution Teams.