SHAREHOLDER DISPUTES IN LLCS, CORPS AND PARTNERSHIPS

Limited Liability Companies (LLCs) offer flexible business structures, but when disputes arise, that flexibility can lead to significant legal complexity. In Illinois, LLCs can be either member-managed or manager-managed, and the management structure plays a critical role in determining the duties owed among members. In a member-managed LLC, all members share management responsibilities and owe fiduciary duties—including duties of loyalty and care—to each other and to the company. In contrast, a manager-managed LLC designates specific individuals to handle day-to-day operations, shifting fiduciary responsibilities primarily to the managers while non-managing members retain limited control and fewer direct obligations. Disputes often center around breach of fiduciary duties, self-dealing, mismanagement, or the improper exclusion of members from business decisions. Whether you’re a majority or minority member, retaining legal counsel experienced in LLC litigation is essential to protect your rights and navigate the complexities of Illinois law.

Shareholders in privately held corporations in Illinois often face unique challenges, especially when the business is controlled by a small group of insiders. Officers and directors of these corporations owe fiduciary duties to both the company and its shareholders, including duties of loyalty, good faith, and full disclosure. Minority shareholders are particularly vulnerable to oppression, such as being denied access to company information, excluded from management, or denied rightful dividends. Illinois law provides remedies for oppressed shareholders, including court-ordered buyouts, dissolution, or damages. However, majority owners facing such claims may argue legitimate business purposes for their actions—a key defense to oppression claims. Shareholders also have the right to bring derivative actions on behalf of the corporation when officers or directors breach their duties to the company, allowing the corporation to recover damages. These disputes demand experienced litigation counsel who understands the nuances of fiduciary obligations and the rights of shareholders under Illinois law.

In Illinois, a partnership is formed when two or more individuals agree to carry on a business for profit—even without a written agreement—though having a well-drafted partnership agreement is critical to avoid future disputes. This agreement outlines profit sharing, decision-making authority, capital contributions, and the procedures for dissolution or dispute resolution. Partners owe each other and the partnership strict fiduciary duties, including loyalty, care, and full disclosure of material facts. Breaching these duties—such as by competing with the partnership, misusing assets, or withholding critical information—can lead to legal liability. If you are entering into a partnership or are involved in a dispute, working with an attorney who can clarify your rights and responsibilities under Illinois law is essential.