When a minority shareholder or partner of a corporation, limited liability company (LLC) or partnership is terminated from employment with the company, the terminated stockholder or partner will likely claim damages as the victim of minority oppression. This could subject the majority stockholders, LLC members or partners as well as the corporation, partnership or limited liability company itself to damages.
The question is whether the individual is being terminated from employment for legitimate business reasons or whether the squeeze out is minority oppression by the majority and thereby denying the terminated person his contractual rights through his ownership interest
The reasons for the squeeze out or freeze out are numerous ranging from a business downturn and the need to downsize to “you are not pulling your weight” to “I’m going through a divorce or my children are starting college and I have to squeeze and freeze you out to pay for those events”.
From the viewpoint of the stockholder, partner or LLC member being terminated, “business downturn and the need to downsize” as well as “you are not pulling your weight” is more likely to be difficult to show minority oppression than “I’m going through a divorce” or “my children are starting college and I have to squeeze and freeze you out to pay for those events”.
Getting to the real truth of what is going on and the underlying reasons for the squeeze out requires analytics and research. Scratching the surface is not likely to get to the real motivation. The technique to determine what is really going on that is driving the decision to terminate the individual the same as most legal situations: keep revealing more and more facts. Each additionally revealed fact will add to the mosaic and will often change the picture that has been painted.
For more information on squeeze outs, freeze outs, minority oppression, shareholders disputes, or other corporate law concerns, you are welcome to contact us at (312) 787-5533 or email@example.com