Two of our attorneys recently negotiated the resolution of a difficultdispute among four owners of a limited liability company stemming from differences in opinion about how to run the business. This led one of the owners to shut the other three out of the company operations. When the three owners came to our firm, it became apparent that no operating agreement had been signed by the owners and there were other corporate irregularities.
A company receives the benefits of limited liability when it follows all of the requisite corporate formalities in establishing a limited liability company or corporation. This means that the owners have limited personal exposure for the company’s debts or other liabilities. However, courts can pierce that corporate veil if the entity is not properly formed, there is undercapitalization, comingling of personal and corporate assets, lack of accounting, or fraudulent business practices.
The lack of an operating agreement was harmful to the owners in our case as there was no written agreement among the members and managers setting forth a process for resolving disputes. Despite difficulties, our attorneys drew upon the CA Corporations Code to negotiate a resolution by which one owner bought out the other three.
Here at Chauvel & Glatt, we understand how limited liability entities operate. We are experienced in handling situations where co-owners cannot amicably resolve their disagreements or wish to dissolve the company. To learn how our attorneys can help you and your business, contact us today.