How the Squeeze Unfolds
Chicago Squeeze Out Lawyers
In our many years handling shareholder and partner squeeze outs and freeze outs, we’ve run into plenty of misconceptions. One of the most common is this. When it happens, when the squeeze comes, I’ll see it coming. While it’s certainly not impossible, more often than not the squeeze blindsides people. It begins well before they realize. The first step is often to realize that you’re being squeezed in the first place.
Some methods of squeeze or freeze outs are better at this than others. One of the best at catching minority shareholders or partners unaware is the freeze out merger. The basic approach is this. The majority party in a business initiates a merger with another company. That merger might be happening for any number of reasons. Perhaps it’s really a great deal for all involved, a chance to expand the business or acquire new market share. Maybe the second company was incorporated just to make this merger possible. The particulars of the merge aren’t very important here. What matter is that a merger provides the opportunity to restructure the company and that can provide a mechanism for squeezing a minority shareholder out.
Now, at base, this is the same as any other squeeze or freeze out situation. Shareholders and partners still have rights. Violating those rights can lead to damages. Whether a squeeze out or freeze out is done with a merger or by any other means, the root questions are the same. Is there a valid business purpose in removing the minority party from the company? Have the rights of the minority party been violated? Has the majority party violated their fiduciary duty? What sets a freeze out merger apart is that it may be hard to see coming. By the time you realize you’re being squeezed, you might already be pushed out.
Horowitz Law Offices represents shareholders and partners to resolve this complex disputes.
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