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Partnership disagreements and business litigation

On Behalf of | Sep 1, 2023 | Business Litigation

Disagreements between business partners can lead to lawsuits in a California courtroom. Sometimes, it may be difficult to straighten out the disputes between parties, making it advisable to avoid legal troubles and litigation. Some steps could be taken to resolve disputes, but litigation could be unavoidable in some situations.

Resolving partnership disputes

The parties could end the partnership amicably by engaging in a buy-out. In order to resolve ownership disagreements, one partner may opt to buy the other partner’s shares. However, if the other partner is unwilling to sell, the only other option is to sell one’s own shares and leave the company. In some cases, selling may be a better choice than staying in a troubled partnership that is not functioning well.

Still, there could be ways to work out disagreements. Mediation is a nonbinding approach in which a third party could provide insights into how to solve problems. Effective mediation could lead to a smoother future relationship between the partners. Dissolving the partnership and the business might be the only option if there is no way to address disagreements.

Legal action

Business litigation could be impossible to avoid in certain situations. For example, if one partner commits fraud, the other partners might sue to recover their losses. Issues surrounding misrepresentation might arise, which can also lead to legal actions. Depending upon the situation, a settlement could end civil lawsuits.

When a company runs into financial troubles, filing for bankruptcy could be the appropriate way to address creditors and obligations. Debt payment disagreements between partners can be compounded by insolvency or limited credit. In such cases, a bankruptcy court may serve as a more practical venue to resolve the situation.