Freeze-Out, Squeeze-Out, and Minority Owner Oppression Litigation

Minority shareholders and LLC members in closely held companies often depend on the good faith of the controlling owners. When majority owners use their power to marginalize, pressure, or eliminate minority owners, the result is often described as a freeze-out or squeeze-out.

For more than 40 years, DiTommaso Lubin, P.C. has prosecuted and defended freeze-out, squeeze-out, and minority oppression cases involving closely held corporations, limited liability companies, and partnerships. These disputes can involve businesses of all sizes, from small family companies to enterprises worth hundreds of millions of dollars.

Recognizing Freeze-Out and Squeeze-Out Tactics

Freeze-out and squeeze-out tactics can include:

• Cutting off or sharply reducing dividends or distributions while increasing compensation or perks for controlling owners.
• Terminating minority owners from employment or removing them from management roles.
• Denying minority owners access to books, records, and financial information.
• Issuing additional shares or interests to dilute minority owners’ stakes.
• Transferring business opportunities, assets, or profits to entities controlled exclusively by the majority owners.
• Using buy-out provisions or valuations that are unfair or based on manipulated financial information.

Our lawyers help clients identify these patterns and develop a record of the conduct and its impact on the company and its owners.

Our Experience in Oppression Litigation

We have extensive experience bringing and defending claims under corporate and LLC statutes, common-law fiduciary duty principles, and contractual rights. We represent:

• Minority owners seeking relief from oppressive conduct, including buy-outs at fair value, damages, or changes to governance.
• Majority owners defending against claims of oppression and breach of fiduciary duty and seeking to enforce valid buy-out and governance provisions.

In many cases, we work closely with forensic accountants and valuation experts to examine compensation, distributions, related-party transactions, and other financial practices that may support or refute claims of oppression.

Legal Tools and Remedies

Oppression and freeze-out claims may involve:

• Statutory claims seeking relief such as buy-outs, injunctive relief, or, in extreme cases, dissolution.
• Derivative claims on behalf of the company for diversion of assets or opportunities.
• Direct claims for breach of fiduciary duty, fraud, or breach of shareholder, operating, or partnership agreements.
• Requests for temporary restraining orders and injunctions to prevent further harm while a case is pending.

We evaluate all available remedies and work with clients to prioritize their goals, whether that is exiting the business on fair terms, regaining access to management and information, or defending against unfounded accusations.

Talk With Our Freeze-Out and Minority Oppression Litigation Team

If you believe you are being frozen out or squeezed out of a closely held business, or if you are a majority owner facing such claims, you should speak with experienced counsel.

Contact attorney Peter S. Lubin or attorney James V. DiTommaso to discuss your situation.

Call 630-333-0333 or contact us through our online contact form to schedule a free consultation.

This page is for informational purposes only and does not constitute legal advice. Contacting us does not create an attorney–client relationship. Past results do not guarantee a similar outcome.