Mediating a Shareholder Dispute
Mediation is an effective and less-costly method for resolving shareholder disputes when compared to the alternative; litigation.
Mediation is also less time-consuming and is less likely to result in challenges since nothing is final until the parties agree. This method of dispute resolution is becoming more popular for many different types of disputes, especially those of a business nature.
When someone is being pushed out of a company, prevented from participating in decision-making, or is simply not treated fairly, the dispute can easily evolve into a shareholder derivative claim or a case of dissolution. Part of the process includes orders to show cause, motions that identify the relief the plaintiff seeks, and claims to perform/identify inspections.
In many cases, the facts are not always black and white, and result in delays and even motions to dismiss the claims. Motions to dismiss can cause litigation to become quite expensive, and allowing the judge or jury to make the decision may not provide the plaintiff with the relief he seeks: a severing of their business relationship.
Unless there is an enforceable buy-sell agreement, it is impossible for a business owner to force his business partner to buy him out. In this instance, mediation can be quite invaluable because the parties can sit down with a mediator and come up with their own solutions in order to achieve their ultimate goal of severing the partnership without the need for drawn-out litigation.
Mediation is a great way for business owners to sit down and raise their complaints about one another, and with the help of the mediator, move forward into either a separation of interests or a new agreement.
The Benefits of Mediation
One of the biggest advantages of mediation is that the parties can choose the mediator they feel is best for their situation, and who has the appropriate skills and experience to help them reach an agreement in their dispute. They can find someone who has experience hearing and settling shareholder disputes, and someone who understands the issues pertaining to appraisals and forensic accounting.
When the parties choose a mediator with practical experience in shareholder disputes, he or she may also be able to assist counsel in drafting the essential components of the buy-out. An experienced mediator also has the ability to help the parties by making sure the exchange of information is sufficient-enough to support the analysis that is necessary for preparation of the business appraisal in the end. What this means is that the parties will be able to avoid the expense of the discovery process, as well as the delays that result from court and the litigation process.
Mediation is an excellent choice for shareholder disputes. Not only is it quicker and cheaper, but the outcome is less uncertain since no decision is binding unless both parties agree to it. Mediation allows the parties to converse not only with each other, but individually with the mediator. There is a much better chance of reaching an agreement that doesn’t require an additional review since the parties have the leeway to consider things the courts may not put into play.
For more information on how Rasansky Resolution Center can help with your shareholder dispute, call us today at (214) 275-5333.