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KJLLAW, Attorney
Category: Business Law
Satisfied Customers: 1617
Experience:  Attorney at Law Office of KJLLAW
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I'm 50% partner with someone in S Corp. and there are no

Resolved Question:

I'm 50% partner with someone in S Corp. and there are no shareholder agreements and an expired operating agreement with a client. All business remains same as before contract expired. He wants to buy me out or dissolve the business as worthless shell. Do I have any case in court not to dissolve and grant discovery, etc?
Submitted: 1 year ago.
Category: Business Law
Expert:  KJLLAW replied 1 year ago.

Good morning. I will answer your question.

Expert:  KJLLAW replied 1 year ago.

Hello and welcome to Just Answer. No attorney-client relationship or privilege is formed by speaking to an expert on this site, the answers are for general information. By continuing, you confirm that you understand and agree to these terms.

Since you own 50% of the shares in the corporation, you can file a petition in court to stop the buyout by showing that you and your partner are hopelessly deadlocked on an agreement, or he is conducting fraudulent or oppressive actions toward you.

However, in NYS it is up to the court’s to decide under the NYS Business Corporations Law what the proper remedy is for the dispute. In that context, a judge may conclude that a buy-out may be a proper remedy for your situation.

The BCL law gives your partner the option to buy you out for the fair value of your ownership share when there is not written shareholder’s agreement. But they must make that election within 90 days after you have filed your papers. However, you will have a right to have an accounting of all of the books and records in discovery, and your accountant (expert) will examine the financials and records and determine a value of the corporation. This process is not short, is time consuming and can be expensive.

So yes, you can file an action in court, and then during the discovery phase you can obtain financial, books, records, etc. and make determination on the value.

I hope this helps.