Shareholder Disputes

Deadlocked With Your Co-Owner? How Illinois Resolves a 50/50 Business Divorce

June 17, 2026 | Peter S. Lubin and James V. DiTommaso

You and your partner built this together, fifty-fifty, on a handshake and a shared idea of where the company was going. The split worked until it didn’t. Now you disagree about everything that matters, the strategy, the money, whether to sell, and neither of you can outvote the other. Decisions stall. Good employees notice. The company that took years to build is freezing in place while the two of you stare across the table, each certain the other is the problem.

A deadlock feels like a trap because the thing that made the partnership fair, equal ownership, is now the thing that paralyzes it. Illinois does not leave equal owners stranded. The law gives a deadlocked owner a path out, and it is rarely the mutual destruction each side fears. If you are staring at a 50/50 split that has stopped working, the question is not whether you are stuck. It is which exit serves you best.

What does Illinois consider a corporate deadlock?

Illinois Minority Owners: How to Force a Company to Open Its Books

June 17, 2026 | Peter S. Lubin and James V. DiTommaso

You asked a simple question. Where did the money go? You own a piece of the company, the profits that used to reach you have thinned, and you want to see the financials that would explain why. The controlling owner’s answer is a wall. He tells you the records are confidential, or none of your concern, or available only if you drop your objections first. He is betting that you do not know the law gives you a key to that door.

It does. Illinois grants shareholders and LLC members an enforceable right to inspect the books and records of the company they own, and it backs that right with penalties and fee awards when a company refuses without cause. An inspection demand is often the single most useful first move in a partnership or shareholder dispute, because everything else you might claim depends on the facts those records contain.

What records can an Illinois shareholder demand?

When the Wrong Done to Your Company Is Yours to Fix: Illinois Derivative Lawsuits Explained

June 17, 2026 | Peter S. Lubin and James V. DiTommaso

You find it by accident. A vendor mentions a company you have never heard of, and a week of digging shows that your co-owner has been routing the business’s best work through a second entity he owns alone. Or the bank statements show payments to a relative for work no one did. You are furious, and you are ready to sue. Then your lawyer asks a question that changes everything. Is this your claim, or the company’s?

That question is not a technicality. In Illinois, getting it wrong can end a meritorious case before it is heard. Some wrongs done inside a company belong to you personally to sue over. Others belong to the company itself, and you may pursue them only derivatively, by stepping into the company’s shoes after clearing a set of procedural gates. Knowing the difference is the difference between recovering and being dismissed.

Direct or derivative: whose claim is it?

Frozen Out of Your Illinois LLC? What the LLC Act Lets a Minority Member Do

June 17, 2026 | Peter S. Lubin and James V. DiTommaso

You own thirty percent of the company, and for the first ten years that felt like a partnership. Then the managing member stopped returning your calls. The distributions shrank and then stopped, though the company is plainly doing well. You are no longer copied on decisions. The manager’s salary has grown to a number that happens to absorb most of the profit you used to share. You are still a member on paper, but you have been pushed to the door without anyone touching the lock.

This is a freeze-out, and the Illinois Limited Liability Company Act gives a minority member real remedies for it. The managing member is counting on you believing that whoever controls the company controls your fate. The statute says otherwise. If you are the frozen-out member, the law gives you leverage the manager would rather you never discover.

What counts as oppression of an LLC member in Illinois?

Being Bought Out of Your Illinois Company? Why the “Fair Value” of Your Shares Is Higher Than the Offer

June 17, 2026 | Peter S. Lubin and James V. DiTommaso

The offer to buy your shares arrives as a single page. You built a quarter of the company over fifteen years, and the letter values your stake at a number that would not cover two good years of the distributions you used to take. The controlling owner calls it generous. His accountant has trimmed it once for your lack of control, trimmed it again because the shares are hard to sell, and used a valuation date that happens to fall right after the worst quarter in the company’s history. The message is that this is the market speaking, and that you should take the number before it falls.

It is not the market speaking. It is a negotiating position dressed up as an appraisal. Illinois does not measure a departing owner’s shares by what a stranger would pay for a powerless slice of a private company. It measures them by fair value, a legal standard with decades of case law behind it, and that standard is usually far kinder to the owner being bought out than the first offer admits. If you are a minority owner staring at a lowball buyout, the law is more on your side than the letter wants you to believe.

What does “fair value” mean for a minority owner in Illinois?

Accused of Freezing Out a Minority Owner? How Illinois Law Defends the Majority in a Shareholder Oppression Case

June 17, 2026 | Peter S. Lubin and James V. DiTommaso

The certified letter arrives on a Tuesday, and it is written to sound like a verdict. Your minority shareholder, the one who stopped coming to work two years ago but never stopped cashing distributions, now says you have frozen him out. His lawyer accuses you of oppression, breach of fiduciary duty, and self-dealing, and demands that the company buy back his quarter of the business at a price his accountant built by taking last year’s best month, annualizing it, and ignoring every liability on the books. The letter closes with a deadline and a threat to ask a judge to dissolve the company you spent three decades building. The number at the bottom reads less like a settlement than a ransom.

The valuation a departing owner demands on the first day is almost always the number that fits the case he wishes he had. It is not the case Illinois law gives him. Shareholder oppression is a real claim with real remedies, but the statute that creates it and the decades of Illinois decisions interpreting it leave the majority far more room than the demand letter admits. The owners who come through these fights with the company intact are the ones who learn early how much of the claim is leverage and how much is law.

Illinois gives a minority owner of a closely held corporation a menu of remedies under section 12.56 of the Business Corporation Act, 805 ILCS 5/12.56, when those in control act in a manner that is illegal, oppressive, or fraudulent. The Illinois Limited Liability Company Act, 805 ILCS 180/35-1, gives a comparable remedy to an oppressed member. Dissolution sits at the bottom of that menu, as a last resort. The remedy that usually controls is a buyout of the complaining owner’s interest at its fair value, and that single phrase, “fair value,” is where most of these cases are actually decided.

Squeezed Out of Your Own Company? Strategies for Freeze-Outs in Closely Held Businesses

November 15, 2025 | Peter S. Lubin and James V. DiTommaso

When Majority Owners Turn on Their Partners

In closely held corporations and limited-liability companies, majority owners sometimes forget that they owe duties to their partners. We see the same pattern again and again: a founder who built a business is gradually cut out of key decisions, denied access to financial information, removed from management, and eventually offered a take-it-or-leave-it buyout at a fraction of what the stake is actually worth.

These “squeeze-out” and “freeze-out” tactics can be subtle—changing compensation structures, diverting opportunities to new entities, or refusing to declare dividends while insiders pay themselves oversized salaries. In more extreme cases, they involve outright fraud: phony invoices to related companies, off-the-books revenue, or manipulated financial statements designed to hide the business’s true value.

We also regularly defend owners wrongfully accused on using freeze-out tactics.

Combining Oppression, Fraud, and Consumer-Fraud Theories

Our firm regularly represents minority owners who have been frozen out of the businesses they helped build controlling owners who allegedly have done that. Depending on the facts, we may bring claims for shareholder oppression, breach of fiduciary duty, common-law fraud, unjust enrichment, and, where appropriate, claims under statutes such as the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2, when deceptive tactics are used to induce an unfair buyout. We also are experienced at litigating affirmative defenses to these types of claims.

The same kinds of deceptive practices we see in consumer transactions—omitting material facts, presenting misleading financials, and papering over obvious discrepancies—often appear in freeze-out cases. When majority owners present inflated or deflated numbers to justify squeezing out a partner, we treat that as serious misconduct, not “hard bargaining.”

The Role of Forensic Accountants in Freeze-Out Cases

In many freeze-out disputes, the key question is simple to ask but hard to answer: what is the company really worth, and how much value has been diverted? To answer that, we bring in forensic accountants who are experienced in partner and shareholder litigation. They can:

Analyze financial statements, tax returns, and bank records to identify hidden income and excessive insider compensation;
Reconstruct the economic value of the business at key points in time; and
Quantify damages from diverted opportunities, self-dealing, and other fiduciary breaches.

We have worked with experts whose prior cases resulted in courts awarding tens of millions of dollars in compensatory and punitive damages to defrauded business owners after proving that they were induced into or kept in unfair deals by false financial information. That experience informs how we structure our own freeze-out and squeeze-out cases.

Remedies: More Than Just a Buyout

In some situations, the right remedy is a fair-value buyout of the minority owner’s interest, supervised by the court and informed by independent valuation. In others, injunctive relief to stop ongoing diversion of assets or to restore a client to management is critical. Where fraud or willful misconduct is involved, we also seek punitive damages to deter similar conduct in the future.

Because freeze-out tactics can overlap with libel—such as when majority owners make false accusations about a partner to justify their removal—we are prepared to add defamation claims when warranted. Our experience protecting reputations in offline and online settings gives us additional tools when smear campaigns accompany financial misconduct.

What Sets Our Freeze-Out Practice Apart

Our work in squeeze-out and freeze-out cases stands out because we:

Combine corporate, commercial, and tort theories to put maximum pressure on wrongdoers;
Use forensic accounting early to understand where the money has gone and what the business is truly worth;
Are comfortable litigating cases that involve complex deal documents, multi-entity structures, and overlapping personal and business relationships; and
Understand that for many clients, these cases are about more than money—they are about vindication and the ability to move forward.

That mix of legal and financial sophistication is especially important in closely held businesses, where personal relationships and family dynamics often collide with corporate governance. Continue reading ›

Forced Buyouts After an Owner’s Death: Buy‑Sell Agreements, Oppression, and “Fair Value” in Illinois

October 25, 2025 | Peter S. Lubin and James V. DiTommaso

Summary: After a founder dies, survivors often pivot from “we have a buy‑sell” to “we can force a redemption under the articles.” Courts care about doing it right—and about protecting the estate’s reasonable expectations.

Start with the contract you actually signed.
A written buy‑sell controls if it exists and is enforceable. Many set a fixed price (or formula), a target closing window, and a note if cash isn’t available—plus interim limits on dividends/comp and inspection rights for the estate until paid. If the company refuses to close or withholds life‑insurance proceeds tagged to the buy‑sell, specific performance is often the cleanest remedy.

If you rely on the Articles, follow the Articles.
Articles that restrict transfers typically require a written election within a set period, dueling appraisals (and sometimes a third), and a closing sequence tied to price determination and insurance proceeds. Skipping these steps risks having a “redemption” declared void ab initio.

Derivative Claims in Illinois: A Practitioner’s Checklist (and Common Traps)

October 25, 2025 | Peter S. Lubin and James V. DiTommaso

Summary: Derivative suits let owners enforce the company’s rights when insiders won’t. Done right, they’re powerful. Done wrong, they’re dismissed. Here’s a field guide for LLCs and closely held corporations.

Who can sue and when?

LLCs: Members may sue derivatively under 805 ILCS 180/40‑1 when managers/members harm the company. Relief can include restitution, constructive trusts, injunctions, and fees—plus orders to stop unilateral withdrawals or restore records access.

Corporations: Shareholders proceed derivatively; the entity is the real party in interest. Oppression claims (for corporations) are addressed separately under 805 ILCS 5/12.56.

Pleading essentials (don’t get 2‑615’ed):

State your demand (or futility) with facts. If you didn’t ask the company to act, plead why demand would be futile with concrete details, not speculation. Judges read this closely on a motion to dismiss.
Name the company as a nominal defendant. It’s indispensable. Forget this and the case can’t proceed.
Mind “information and belief.” If you use it, plead the specific facts that support that belief and what you did to obtain records (or why you couldn’t). Courts reject fishing expeditions.
Don’t double‑count damages. Separate derivative (company) harms from individual claims; if your “personal” count just repackages company damages, expect dismissal.
Use the records statutes before you sue.

What Illinois Laws Prevent a Partner from Cheating Another Partner?

May 23, 2024 | Peter S. Lubin and James V. DiTommaso

Under the Illinois Uniform Partnership Act (IUPA), all partners are liable for any wrongful act or omission by any partner (In re Keck, Mahin & Cate, 274 B.R. 740 (2002)), (Bane v. Ferguson, 707 F.Supp. 988 (1989)). This includes acts that occur in the ordinary course of the partnership’s business or are authorized by the partners (Bane v. Ferguson, 707 F.Supp. 988 (1989)), (In re Ascher, 141 B.R. 652 (1992))[3]. The liability is not limited even for “innocent” partners.

As for the protection against cheating, partners are fiduciaries for one another under Illinois law (Bane v. Ferguson, 707 F.Supp. 988 (1989)). This means they have a duty to exercise the utmost good faith and honesty in all partnership dealings (Johnson v. Woldman, 158 B.R. 992 (1993)). Particularly, the Uniform Partnership Act in Illinois imposes a trust duty (Johnson v. Woldman, 158 B.R. 992 (1993)), (Federal Deposit Ins. Corp. v. Braemoor Associates, 686 F.2d 550 (1982)). It mandates that every partner must account to the partnership for any benefit and hold as a trustee for it any profits derived by him/her without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership, or from any use by him/her of its property.

However, this fiduciary duty is only recognized when a partner derives profits without the consent of the other partners (Johnson v. Woldman, 158 B.R. 992 (1993)). Also, the liability of any partner does not extend to former partners. Additionally, partners cannot sue their fellow partners for acts that occur in the ordinary course of business or are authorized by the co-partners until there has been a final settlement of partnership accounts (In re Ascher, 141 B.R. 652 (1992)).

If a partner believes that he/she has been cheated, the appropriate remedy to seek under the Illinois Partnership Act could be an accounting, especially if the issue between partners requires an accounting.

In federal cases, the principle is generally the same. For instance, in the case of In re Keck, Mahin & Cate, it was established that under Illinois law and the Agreement, partners are liable for claims arising before or during the time they were partners (In re Keck, Mahin & Cate, 274 B.R. 740 (2002)). Continue reading ›