Out In The Cold After A Merger - Misappropriation Of Corporate Opportunity? Thomas Pedreira
Q.
I have two business partners in a distribution business that has now failed. For the last year the company [president] has been working with another company to merge. During this time he set the other company up with our vendors and sold for the other company. There was a gentlemen's agreement that all three of us would be taken on in the merger. The other company has [since] decided only to hire us three with shares to be earned as the new company grows. We have now shut down our company and the other two partners are now working for the new company and I have been given the run around and left out in the cold. Do I have a case against the partners and the new company? If so what type of lawyer should I look for?
-- Anonymous
A.
There must be more to this story than meets the eye. A first consideration, though, would be whether or not there was actually a merger where the two companies were legally joined. If so, you may have dissenter's rights that you could try to enforce if you did not want to go along with the deal. However, it sounds like the business was just transitioned without much if any consideration being paid to the old company. You could try to go after your partners for misappropriation of a corporate opportunity to which you were entitled, or for breaching fiduciary duties that may or may not be owed to you. If there was a buy-sell or similar type of agreement was in place between you and your two partners, a breach of contract action might be possible, as well. Whether or not you can go after the new company depends on being able to prove some kind of wrongful conduct, which could be difficult.
A practical consideration is also whether or not there is enough at stake and if you can afford the cost of a legal battle, which could cost you tens of thousands of dollars in attorneys' fees. You would want to talk to a business litigator, and it would be a good idea to buy an hour of his or her time to see if this is worth pursuing. He or she may also be able to come up with other leverage points or send a demand letter to get you some redress short of a lawsuit. Set up a meeting right away since you may lose some or all of your rights if you wait too long.
