Attorney Neal Jacobs scored a critical "Bet The Company" litigation win at trial in the New Jersey Superior Court, Chancery Division. Jacobs Law Group's win assured the survival of the client, a scientific and technical manufacturing company (the "Company"). This win saved the Company and the jobs of its 40+ employees and halted the attempted raid on the Company's equity. If Jacobs Law Group had lost, the likely next step would have meant liquidation of the Company, it's likely bankruptcy, closure of operations, and the loss of most if not all of 40+ jobs.
The litigation grew out of a twenty year old shareholder agreement originally designed to support a valuation of each founder's interest in the Company upon their deaths. But in reality,that valuation formula had been adopted to justify the large amounts of life insurance each founder desired for estate planning. The life insurance was originally titled such that, when buying back the shareholders' interests, the Company benefitted from the life insurance proceeds.
Unfortunately, the founders later changed the life insurance ownership, such that the life insurance no longer funded the buyout under the shareholders agreement. Thus, the Company was then obligated to not only pay an exorbitant amount for its own founders' shares, but it also no longer had the benefit of the life insurance proceeds to support the buyout.
Unfortunately, both founders died within months of each other leaving the Company with an obligation to buy out both estates under a strict formula which the Company could not afford.
Negotiations proved fruitless as one founder's estate refused to give up its claims under the shareholders agreement. The Company was then forced into a "bet the company" litigation posture, litigating the validity of the 20 year old shareholder's agreement; a loss would have meant the end of the Company and its 40+ jobs in Southern NJ.
Mr. Jacobs had the very difficult task of having to prove that a contract entered into by sophisticated business parties was unenforceable.
Mr. Jacobs devised a trial strategy of distilling the twenty years of shareholder transactions and corporate conduct into an easily understood evidentiary presentation; demonstrating that, as a legal matter, the shareholder's agreement had in fact been abandoned and that it had no further legal validity.
The Court held Mr. Jacobs to a very difficult burden of proof: Abandonment had to be shown by clear and convincing evidence. Jacobs Law Group's lawyers had to prove that the founding shareholders intentionally refused to follow the shareholders agreement and that the other parties had acquiesced in that abandonment.
Demonstrating exemplary trial skills, Jacobs Law Group attorneys Neal Jacobs persuasively demonstrated to the satisfaction of the Court that the shareholders agreement had never been followed in any meaningful way, that the contracting parties had deviated from its terms on multiple occasions, and that each had acquiesced in such departures.
With this win, the Jacobs Law Group continues its track record of success at trial in complex business disputes.
The commercial litigation attorneys at Jacobs Law Group represent businesses and business owners in commercial litigation matters involving business torts, class actions, complex contracts, officer and director and majority shareholder breach of fiduciary duty claims and other shareholder relations matters. Jacobs Law Group Lawyers seek to achieve the best result possible for the client.
The firm's reputation in commercial litigation matters is further enhanced by the consistent recognition of the firm as having the highest rating possible by Martindale & Hubbell.