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Internal Disputes

Internal Disputes

In some cases, the greatest threat to a business comes not from an outside force, but from inside the company itself. This most often takes the form of partnership disputes, which can quickly bring business activities to a grinding halt, cut into profits, and damage professional reputations. Although some internal business disputes must be litigated in court, doing so can be expensive and time-consuming, so we often encourage parties to attempt negotiation through mediation before taking a case to trial. Unfortunately, some disputes cannot be resolved in this way, in which case the parties will need to retain an experienced business attorney who will aggressively represent their interests in court.

Management/Owner Disputes

Nobody enters into a business partnership expecting it to dissolve over a disagreement or allegations of misconduct. Unfortunately, the reality is that most partners will at one time or another butt heads over either a personal or business-related issue, such as:

  • Differing visions and goals for the future of the company;
  • Conflicting management styles;
  • Suspicions that one party is involved in fraudulent activity or is otherwise breaching his or her fiduciary duties;
  • Conflicts over sharing profits;
  • Breach of contract concerns;
  • A disagreement over how assets should be divided upon dissolution; or
  • One party’s misappropriation of business assets or opportunities.

One of the best ways to ensure that these issues don’t arise is to create a well-drafted contract or partnership agreement that describes each party’s responsibilities and the consequences of failing to fulfill them. Many agreements also dictate how the business should be dissolved in the event of a serious dispute or identify who is responsible for subsequent contributions if partnership funds run short.


Dissolutions

Some disputes are so serious that the individuals are unable to continue in business together. In these cases, the best option may be to dissolve the business entirely. There are two main methods of dissolution, known as voluntary and involuntary dissolution. Voluntary dissolutions occur when all partners, shareholders, or directors agree that ending the company is the best course of action, after which they will need to divide business assets, pay liabilities, provide notice to customers or clients, and finish any ongoing projects. Involuntary dissolution, on the other hand, occurs when at least one party wants to dissolve the company, but the other does not agree. In these situations, courts are required to step in and order an accounting and division of assets and debts. The court will also attempt to resolve any complaints of improper conduct by one or more partners.

The dissolution of a company is dictated by state law, so if you are involved in a dispute with another director, manager, partner, owner, or shareholder and have been unable to reach a compromise, it is important to speak with an experienced business attorney who can ensure that you comply with all state regulations.


Contact a Los Angeles Business Attorney

To discuss your own dispute-related questions with an experienced attorney, please contact the legal team at Valiant Law by calling (909) 677-2270 today. We are standing by and eager to help you throughout each step of your case.

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