Family Business Dispute Lawyers
Separation Divorce Business Dispute
Family Business Claims Lawyers
Lawyers for Family Business Breakups
Divorce and Family Business Lawyers

Family Partnership Litigation
Family Company Litigation in Toronto

Serving All of Ontario & Elsewhere in Canada From Our Toronto Offices

Many businesses in Canada are family businesses or have evolved from family businesses. Family businesses present many unique challenges as they grow, as key members of the company or partnership leave the family business, or when personal relationships of the key members of the family business change or deteriorate.

Sometimes the loss of a stabilizing senior member from the family business, caused by death or retirement, may be a catalyst for long standing hostilities to surface within the operation of the family business.

Changes in a family business and the challenges presented by change can often result in legal disputes between interested parties. Family business disputes are often be protracted, expensive, and disruptive, and may even result in the sale, division or winding up of the family business.

Roles of Family Members in Family Businesses

One of the most common differences between a family business and other established businesses, whether or not a shareholders’ agreement, partnership agreement and other legal documentation was used in the formation of the family business, is the informality in operation of the family business, including the often ignored distinction in fact between employees, shareholders, or partners – since family members take on multiple roles.
A family business is usually a reflection of family relationships and thus the family and the family business may be profoundly interconnected.  However, with the passage of time, sometimes the legal roles of family members in a family business do not mirror the evolving family structure or hierarchy, perhaps because of retirement, death or estrangement of a family member involved in the business. That may result in an increasing cause of tension or disagreement within the family business.
It is not uncommon for family businesses to rely on the knowledge, skill, and experience of certain more senior family members, in getting the business off the ground and running it, without giving thorough consideration to, or legal characterization of, that family member’s role in the business – as partner, director, officer, or shareholder.

Disputes often arise even when a family business succeeds or grows, since those family member involved at the earlier stages may re-assess their positions in light of the success and seek to capitalize on their early involvement.

Disputes about management, control and ownership of the assets of the family business, obligations and the sources of liability often arise.

Majority, minority, or equal family members often find themselves in disputes with each other in a way which may wrongfully obstruct the operations and growth of the family business, or which wrongfully seeks to “squeeze out” or oppress opposing interests, requiring prompt and agile legal response.

Family Business Disputes – Examples

We can assist in providing prompt and cost-effective advice relating to:

  • Shareholder agreement disputes, including oppression claims
  • Partnership and Joint Venture disputes
  • Enforcing Buy/Sell and Shotgun clauses
  • Investor and crowdfunding disputes
  • Corporate compliance and regulatory issues
  • Deadlocked boards of directors
  • Enforcing or defending intellectual property claims
  • Claims involving breach of privacy or confidentiality
  • Employment and Dependent Contractor disputes
  • International and cross-border disputes

Impact of Separation and Divorce on Family Businesses

Complex questions arise in the division of property and assets when dealing with a family business during a separation or divorce. The value of the family business is included in the equalization of net family property. If there is no pre-existing shareholder agreement, this further complicates the division of property.

Tough decisions need to be made about the continued management and control of the family business after separation and divorce, including whether the spouses choose continued joint management, a buy-out by one spouse or the dissolution of the business.

Why Choose Gilbertson Davis LLP?

Gilbertson Davis LLP has lawyers that have experience dealing with business disputes for companies of all sizes, including, family businesses, start-ups and closely held corporations. A lawyer at Gilbertson Davis LLP was a member of the faculty for the Osgoode Professional development program Shareholder Litigation and the Closely-Held Company (held on April 7, 2015)

It is important to obtain prompt and effective legal representation, before these issues become significant, since these disputes may dramatically impact the stability of the family business while they remain outstanding.

Delay may also impact upon the nature and extent of urgent court ordered remedies available which concern obtaining and preserving records and evidence, preserving or maintaining the status quo of control (or otherwise), and the freezing of assets of the family business and access to them in appropriate circumstances.

If you operate or are involved in a family business, or are a shareholder, director, officer, partner, or employee of a family business with a legal dispute, contact us for an initial consultation.