Family Business Challenges from Divorce or Separation
Many businesses in Canada are family businesses or have evolved from family businesses. Family businesses present many unique challenges as they grow should the personal relationships of the key members of the family business change or deteriorate. Divorce and separation can have serious impact upon family-owned and family-run businesses, whether incorporated companies or partnerships.
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.
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 in family law proceedings.
Management and Control
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. If there is no pre-existing shareholder agreement, this further complicates the division of property and /or the exit strategies.
Oppression Remedy
In some cases, the remedies for harm to a shareholder in a family business is the statutory oppression remedy under the Ontario Business Corporations Act or the Canada Business Corporations Act.
Derivative Action
If a spouse has caused, or is causing harm to a corporation, this can require consideration of each of family law remedies and also the civil remedies achieved through a so-called derivative action commenced in the name of the corporation, which may be available under the Ontario Business Corporations Act or the Canada Business Corporations Act.
Gilbertson Davis LLP Team of Experienced Family Law and Business Dispute Lawyers
Clients in these unique circumstances can benefit from having both an experienced family law lawyer and an experienced business dispute lawyer on their team. Gilbertson Davis LLP’s family business and divorce team of lawyers can offer that advice and representation.
Please see our related webpages: Family Business and Divorce Practice Group, Family Business and Divorce, Family Law, Oppression Remedy Claims, Derivative Actions, Partnership Disputes, Employment Disputes and Sale of Business Disputes.
Prompt and Effective Legal Representation
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.
Contact Us
If you own, 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.
Call our Intake Coordinator on 416 979 2020, ext. 223 or via email on info@gilbertsondavis.com.
Brief informational summaries about insurance litigation, commercial litigation and family law litigation matters in the courts of Ontario and Canada are periodically published on our website. Please note that our website content is for informational purposes only, and should not be construed or relied upon to provide legal advice. If you require legal advice, please request an initial consultation with Gilbertson Davis LLP using the Request Consultation Form on this webpage or by contacting our Intake Coordinator on (416) 979-2020, ext. 223 (both subject to the Terms of Use described on our Contact page).
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