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Stopping a Former Partner from Competing and Interfering with a Demolition and Asbestos Removal Company’s Business

Attorneys Involved: Neal A. Jacobs

Our client, the principal owner of a successful demolition and asbestos removal business worth about $10 million, had previously made his company’s accountant a partner in the business. Their relationship later deteriorated, however, and the partner left the company while retaining his ownership stake.

The former partner later opened a competing business and began using his stake in our client’s company as a basis for demanding access to financial records, proprietary information, and dividends.

Jacobs Law Group’s commercial law attorneys reviewed the records of our client’s company and conducted an investigation of the former partner.

Under our advisement, our client used the provisions of the Pennsylvania Business Corporation Law to execute a reverse stock split. The company’s stock was consolidated to a point that made the former partner’s stake equivalent to a fraction of a share of the company. Our client’s company then obtained a valuation report and used that report to determine a fair value for the former partner’s fractional share.

Because Pennsylvania law allows corporations to redeem fractional shares for cash, the company was able to force out the competing former partner – and remove his access to sensitive company information – with a single cash payment.

The forensic investigation by the Jacobs Law Group commercial lawyers further uncovered improprieties by the former partner in his maintenance of the company’s records. Our client’s ability to demonstrate these improprieties in court ended any further litigation between them.

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