Legal Question in Business Law in California

Re: I need to get out of a 33% share in a S-corp

Disclaimer: the materials provided below are informational and should not be relied upon as legal advice.

Yes, involuntary dissolution requires 1/3 share ownership and a deadlock. Is there a buy-sell agreement in place? If the directors are breaching their fiduciary duties towards you, you can sue them on available causes of action. You should retain your own lawyer to protect your legal rights.

Re: I need to get out of a 33% share in a S-corp

Your best bet is to hire a business attorney to explore your options with you. These situations are typically more complicated than can be answered in this type of forum and also typically deal with larger amounts of money which means they require greater attention to detail and specifics.

First step is to have an attorney review any articles of incorporation, bylaws, and/or shareholder agreement(s) and to go over in detail what has taken place. This is usually more easily done via phone. Feel free to contact me to discuss this further.

To answer your question above, in California a person with 33 1/3% or greater can file a complaint for involuntary dissolution. There are other situations where an involuntary dissolution can be filed but the first thing to determine is whether this is the right option as well as if it's an option available to you.

Re: I need to get out of a 33% share in a S-corp

Your 'strategy' is to negotiate a buy out of your interest at a reasonable value and on reasonable terms, to avoid having to file a lawsuit for appraisal and accounting. This is a classic situation where most people would hire an attorney to handle the negotiations. You are too close and emotionally invested to do so yourself, and probably not experienced in drafting appropriate settlement agreement terms. If serious about doing so, feel free to contact me.

Re: I need to get out of a 33% share in a S-corp

You can hire an attorney to review your corporate documents, and advise you on a strategy. Let me know if you want help.

Best,

Daniel Bakondi, Esq.

IMPORTANT:

No attorney-client nor confidential relationship is created through this communication. You may not rely in any way on this communication, and nothing herein constitutes legal advice nor legal opinion. Your issue may be time sensitive and may result in loss of rights if you do not obtain an attorney immediately.