NYC Partnership & Shareholder Dispute Lawyers
Freeze-OutsDeadlockSelf-DealingForced Buyouts
Most ownership disputes surface long after the conduct behind them began. A co-owner signs a contract nobody else saw. A distribution that arrived every quarter stops arriving. Access to the accounting file quietly ends. Each item reads as an oversight on its own, and owners of closely held companies usually give the benefit of the doubt for months before the pattern registers as something else.
Kleyman Law Group represents shareholders, LLC members, and partners across Brooklyn, Queens, Manhattan, and Staten Island in partnership and shareholder disputes over the companies they built. The work runs from a demand for financial records through fiduciary duty claims, emergency applications, litigation in the court or arbitral forum the governing agreement requires, and negotiated exits.
Business Disputes Between Owners in New York
The remedy depends on the entity: a twenty percent shareholder can petition for dissolution on oppression grounds, an LLC member cannot.
Buyouts, Deadlock, and Dissolution
One owner wants out of the business and the other will not buy the interest, or two fifty-fifty owners have stopped agreeing and nothing can pass a vote. Forced buyout, negotiated exit, deadlock, and judicial dissolution of a New York corporation or LLC.
Explore Buyouts and DeadlockShareholder and Operating Agreements
A co-owner ignored the operating agreement or shareholder agreement. A buy-sell clause not honored when the triggering event fires, an interest transferred around the right of first refusal, and decisions made without the consent the agreement required.
Review Agreement Breach ClaimsFreeze-Out and Minority Oppression
A partner locked another owner out of the business, or a majority owner is pushing a minority owner out of a company they helped build. Distributions cut off, exclusion from management, employment terminated, and access to books and records denied.
Explore Minority-Owner Freeze-OutsDenied Books and Financial Records
A co-owner is refusing to hand over bank statements, tax returns, the general ledger, or payroll records. Shareholders, LLC members, and partners hold inspection rights that a court can enforce, and the demand often surfaces the conduct behind the dispute.
Review Records Inspection RightsFiduciary Breach and Self-Dealing
A co-owner is paying himself first and using company money personally. Breach of fiduciary duty by a controlling owner, officer, or managing member, covering self-dealing transactions, usurped corporate opportunities, and derivative claims brought for the company.
Review Fiduciary-Duty ClaimsPartner Theft and Asset Diversion
Money is missing from the business account and the numbers stopped adding up. A business partner stealing from the company, revenue skimmed before it reaches the books, payments to vendors nobody can identify, and work routed to an entity the insider controls.
Explore Partner Theft RecoveryEmergency Relief and Asset Freezes
A co-owner is draining the bank account, has changed the signature authority, or has locked the other owner out of the premises and the systems. Temporary restraining orders, preliminary injunctions, and applications for asset restraints where the applicable legal requirements are met.
Review Emergency Injunction OptionsFiduciary duties bind the owners who actually run a closely held business
By the time one owner recognizes the pattern, the other has often been positioning for months: moving resources, taking client relationships in hand, and building a record to justify whatever comes next.
That dynamic separates an ownership fight from commercial litigation against an outside party. The adversary holds the same bank signature authority, supervises the same employees, and serves the same clients. A co-owner knows which relationships are portable, which assets are liquid, and which decisions can be made without a second signature.
Fiduciary duties attach to whoever holds control of the business. Partners owe them to one another, officers and directors owe them to the corporation and its shareholders, and managing members of an LLC owe them to the company and the other members. The duties cover loyalty, care, and good faith. An owner who diverts a corporate opportunity, pays a related entity above market, or withholds the books and records a co-owner is entitled to inspect faces breach of fiduciary duty claims that New York courts remedy through damages and disgorgement.
The available remedy depends on the entity and on who suffered the loss
A shareholder holding twenty percent or more of the voting shares of a closely held corporation whose stock is not publicly traded may petition for dissolution on grounds of oppressive conduct, or on grounds that corporate assets are being looted, wasted, or diverted.
The petition does not compel a purchase. It opens a window in which the corporation or the other shareholders may elect to buy the petitioner's shares at fair value, and courts treat dissolution itself as a last resort where an alternative protects the minority owner.
An LLC member holds no equivalent statutory buyout. Dissolution turns on whether it remains reasonably practicable to carry on the business in conformity with the articles of organization and the operating agreement, and oppression alone generally does not meet that standard.
A partner in a general partnership formed for no definite term may dissolve it by expressing that intent. Dissolution does not terminate the partnership, which continues until the winding up is complete, and each partner remains personally liable for partnership debts.
Every claim is also either direct or derivative, and the line turns on who suffered the harm and who receives the recovery. Withheld distributions injure an owner directly. Diverted revenue injures the company, so the claim is derivative and the money returns to the business.
The governing documents and the records decide what an ownership dispute can produce
The first review establishes who holds voting control, who holds bank signature authority, and what the operating or shareholder agreement already decides. Governing documents frequently fix the forum, the valuation method, and the exit price before filing.
Records leave the reach of an owner who does not control the books once a dispute becomes open. The work covers litigation holds, statutory demands to inspect books and records, and, where assets face immediate risk, urgent applications for relief, with timing and outcome controlled by the court.
Ownership disputes resolve through a buyout, a dissolution, a damages award, or a negotiated exit. Where litigation is required, the forum depends on what the governing agreement compels, and the case proceeds through discovery, motion practice, and trial.
Why Business Owners Work With Us
Disputes across corporations, LLCs, and partnerships.
Minority shareholders frozen out of family businesses. LLC members discovering years of self-dealing. 50/50 partners deadlocked over direction. The governing statutes and fiduciary standards that decide them repeat.
Four borough venues, each with separate commercial practice.
Brooklyn Supreme Court. Queens Supreme Court. Manhattan's Commercial Division. Staten Island. Each venue applies its own conference calendar, filing procedures, and case-management practices, and a commercial case is assigned on that basis.
Emergency orders obtained, contested valuations tried.
Temporary restraining orders that froze accounts before funds transferred out. Preliminary injunctions blocking asset sales mid-transaction. Hostile witnesses examined and valuation experts cross-examined in contested buyouts.
Ownership disputes are worked from either side, for the owner or for the company
Representation runs to minority owners, majority owners, managing members, and the company itself, in Brooklyn, Queens, Manhattan, and Staten Island.
Questions Business Owners Ask
Secure the records while access still exists. Bank statements, tax returns, payroll records, the general ledger, and email leave the reach of the owner who does not control the books the moment the dispute becomes open. A statutory demand can compel production later, but that takes months, and deleted communications support sanctions once litigation is reasonably anticipated.
Locate the operating agreement or shareholder agreement in the same week. It usually decides the forum, the exit price, and whether a filing carries a penalty the owner has forgotten about.
A shareholder of record may demand, on at least five days' written notice, the minutes of shareholder proceedings and the record of shareholders under BCL § 624(b). Annual financial statements are separately available on written request under § 624(e), allowing reasonable preparation time. An LLC member's rights appear in LLC Law § 1102.
A broader common law right reaches account books, tax returns, and records of subsidiaries, but it requires a proper purpose. Investigating suspected mismanagement and valuing an interest in anticipation of a sale are both recognized proper purposes.
That move usually backfires. Changing the locks, cutting off a co-owner's account access, or stopping their distributions creates the exact exclusion evidence a freeze-out or fiduciary claim is built on, and it can turn the owner who acted into the respondent. Where the governing documents grant that authority outright, the analysis differs, which is why the documents get read before anything is done.
The owner who preserves the status quo generally arrives at the negotiation in the stronger position.
Yes. Fiduciary duties among the people who run a closely held company exist regardless of what was signed, and the statutory default rules fill whatever the documents left out. The absence of an agreement can even help, because the other side has no contract handing them the authority they are claiming.
What disappears without a written agreement is the machinery: no buy-sell clause, no valuation formula, no tiebreaker, no exit right. Those gaps get filled by defaults that frequently allocate control and money differently than the owners assumed at formation.
No, and the distinction decides most of these cases. A majority owner is entitled to win ordinary business arguments. Pausing distributions because the company genuinely needs the cash, making a hire over an objection, or steering the business somewhere a co-owner dislikes are decisions the majority is allowed to make, and courts generally will not second-guess them where they were made in good faith and without self-interest.
What converts a lost vote into a claim is conduct aimed at one owner rather than applied to the business as a whole, or a transaction where the decider was also the beneficiary. Courts look at fairness and motive, not at whether an owner came out on the losing side.
Stopping compensation is standard evidence in an oppression claim. Oppression is measured by whether the majority's conduct substantially defeats expectations that were objectively reasonable and central to the decision to join the venture, and employment is frequently part of the expected return in a closely held company.
Compensation set by a related-party arrangement, or raised for the controlling owner while another owner receives nothing, draws closer scrutiny. Payroll records and tax returns showing who was paid what over several years usually decide the question.
BCL § 1104 gives holders of one-half of the voting shares standing to petition on three grounds: directors so divided that the votes required for board action cannot be obtained, shareholders so divided that directors cannot be elected, or internal dissension between two or more factions where dissolution would benefit the shareholders.
Courts require the deadlock to pose an irreconcilable barrier to the continued functioning and prosperity of the corporation. An owner holding less than one-half generally lacks standing under this section, and the reason the deadlock arose is not the question.
Fair value is the owner's proportionate share of the going-concern value of the business as a whole. Under BCL § 1118, and under the appraisal standard in BCL § 623, New York courts do not apply a minority discount, since penalizing an owner for lack of control hands the majority a windfall.
A discount for lack of marketability may be applied, because shares in a closely held company cannot be sold on a public market. Fair value also differs from fair market value, the standard that governs a partner's interest under Partnership Law § 69.
Under CPLR 6401 a temporary receiver may be appointed where there is danger that the property will be removed from the state, lost, materially injured, or destroyed. The motion can be made before or after service of the summons and at any time before judgment.
In a dissolution proceeding BCL § 1113 authorizes appointment of a receiver, and BCL § 1115 permits orders restraining shareholders, directors, officers, and creditors from imperiling corporate assets. Courts treat receivership as a drastic step and grant it sparingly.
Faster than most owners expect, for reasons that have nothing to do with filing deadlines. Evidence gets buried, money moves, and conduct that went unchallenged for a year starts to look like the arrangement both sides accepted. In a buyout the filing date can fix the valuation date, so timing carries a dollar figure.
Limitations periods do apply and vary by claim. Breach of fiduciary duty claims seeking damages generally run three years, extended to six where fraud is an essential element or equitable relief is sought, while claims under an operating or shareholder agreement generally run six.
Related Guides
A twenty percent shareholder can petition for dissolution on oppression grounds. What conduct qualifies, and what the court can order instead.
Shareholder & Partnership Disputes Shareholder Deadlock and DissolutionEvery vote is a tie and nothing passes. Which owners have standing to petition, and what a court requires before ordering dissolution.
Shareholder & Partnership Disputes Business Partner Fraud and Missing FundsTransfers nobody authorized and invoices that do not reconcile. What to preserve first, and the steps that damage a case before it starts.