Demonstrating Arnstein & Lehr’s collaborative spirit, Chicago Partners Steven Malitz and Erik Kantz drew upon expertise from the Shareholders’ Rights Practice Group, Business Organizations and Transactions Practice Group, Labor & Employment Law Practice Group and the Litigation Group to resolve a pair of shareholder’s rights disputes.  In each case, the attorneys’ extraordinary teamwork generated favorable and timely outcomes for the firm’s clients.

In the first matter, a home healthcare business was referred to Arnstein & Lehr because their current counsel was unable to resolve a shareholders’ dispute in an acceptable amount of time.  A rogue shareholder and his wife filed two separate lawsuits against the company after the shareholder’s wife, who was at the time an officer and landlord of the company, was dismissed from her position.  In his lawsuit, the disgruntled shareholder alleged waste and sought corporate documents as well as an exorbitant sum for a buy-out of his shares.  His also wife sued for alleged unpaid rent and thereafter demanded compensation for services rendered.

Malitz and Kantz worked quickly, bringing Arnstein & Lehr’s collective expertise to bear on the dispute.  Their analysis of the situation yielded a winning strategy that demonstrated the shareholder and his wife breached fiduciary duties to the company by failing to devote adequate time and attention, diverting patients to a competitor, and making unauthorized expenditures.  Additionally, Malitz and Kantz showed that the valuation of the company referenced in the shareholder’s suit was unreasonable and unsubstantiated.  Despite the fact that there were minimal corporate documents and no shareholders’ agreement, Malitz and Kantz were able to force a settlement in which the company repurchased the shares for a minimal buy-out.

Malitz and Kantz produced an outcome in which the shareholder and his wife were permanently separated from the company. Both suits were dismissed and all claims of any kind were released.  They followed this up by preparing proper corporate documents for the company and offered preventative counsel so that it could flourish without the specter of further litigation.

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A second shareholder dispute involved four officers of a corporation who were virtually held hostage by an out-of-state businessman who was the purported sole shareholder.  The four officers tirelessly built the business and were promised shares in the company.  However, no corporate documentation was ever produced.  The purported sole shareholder began taking a larger share of the income, which effectively took money out of the pockets of the four officers who were responsible for the company’s success.  When the officers protested and threatened to leave the company, the absentee shareholder threatened legal action citing restrictive covenants contained in one-sided employment agreements.

Malitz and Kantz pooled the firm’s expertise to properly analyze the situation.  The resulting strategy that Malitz and Kantz aggressively executed produced an ideal outcome in which the four officers lawfully separated from the business, terminated liability to or from third parties for acts or transactions done in the name of the business, staved off eviction from the office suite, obtained a novation of the lease through expedited negotiations with the landlord, retained key employees and continued to practice their profession.  Through their efforts, Malitz and Kantz enabled their clients to start their professional lives anew without costly litigation.