A major construction company with Illinois roots has demonstrated that serious “business oppression” conflicts can happen even in family-run businesses. As in many of these situations, allegations of fiduciary breaches and oppression of minority shareholders have triggered litigation and driven apart individuals who once enjoyed a close relationship.
Payne & Dolan is a Wisconsin-based business that services roads throughout the Midwest and performs a wide range of other tasks. Five separate companies fall under the Walbec Group umbrella, named after its founder Walter Bechthold. Currently, ownership is divided among Mr. Bechthold’s three children and their descendants, with grandson Kurt Bechthold serving as CEO.
Walter Bechthold’s daughter, Nancy Dewey, and her son, John, wish to sell their stake of the business but claim they are victims of a “classic freeze out/squeeze-out oppression formula.” The issues in their legal claim mirror those in many business divorce situations, including:
- Valuation disputes — The Deweys say the controlling executives have vastly underrepresented the value of their shares, perhaps by “hundreds of millions of dollars,” in order to capitalize on a provision that requires shares to be offered back to the business before a public sale. It’s very easy for majority interests to lowball the worth of tangible assets and goodwill in order to deny other shareholders what they are owed.
- Alleged breaches of fiduciary duty — Plaintiffs have made breach-of-fiduciary claims for several years, stemming from a question regarding the distribution of excess funds. Even when a significant disagreement has broken out between partners or shareholders, a legal obligation still exists to honor bylaws and serve the company’s best interests.
- Access to records — Reviewing authentic and accurate business records can present a significant challenge, even when laws exist to guarantee access. Plaintiffs claim that certain Payne & Dolan’s revenue from mining operations do not appear in the records they received.
Each situation is unique and many different minority business oppression schemes exist. Whether you’re being cut out of key decisions or denied access to company books, it’s best to retain a lawyer with significant experience in this area.
Schwartz & Kanyock, LLC represents minority interests in all types of businesses alleging oppression by majority shareholders and partners. If you believe your rights are being violated or you’re being squeezed out improperly, please call 312-436-1442 or contact us online to schedule a consultation at our Chicago office.
