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Ask a Lawyer -- Corporations
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Question: Our company is a C-corp and there where three partners. About one year ago we fired one partner as an employee of the company for lack of performance. This partner is trying to force us to buy his third of the company. If we do not agree to the settlemnet he has proposed he has threatened to have the company's assest liquidated. Do we have to buy him out and can he liquidate the corporation? Response: Unless you have some sort of shareholder buy-sell agreement, I think the disgruntled shareholder-former employee is blowing smoke. Now, minority shareholders can cause headaches for the majority but forcing a liquidation seems out of the realm of possibility. You might want to ask the disgruntled shareholder to state in writing the legal grounds under which he contends he has authority to force liquidation. Then, if the letter ever comes (doubtful), take it to counsel for an opinion. I'll add one caveat to the above: if the company has an outstanding offer for purchase of all its assets, then the minority shareholder may certain rights if the offer is rejected by the majority. Please seek advice of counsel if your corporation faces this situation. Submitted: 05/28/2008; Bruce, Michigan Response: 05/28/2008; JJR Add A Comment |
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