Disagreements between business owners can quickly affect employees, customers, finances, and daily operations. A dispute that begins with one decision may grow into a larger conflict involving ownership rights, company control, financial records, or the future of the business.
The term business partner may refer to an LLC member, corporate shareholder, officer, director, or another person with an ownership interest. The rights and responsibilities of each owner depend on the type of business, its governing documents, and Indiana law.
Common Causes of Business Owner Disputes
Business relationships may break down for many reasons. Some disagreements concern the direction of the company, while others involve allegations of misconduct or violations of an agreement.
Common issues include:
- Disagreements over management decisions
- Unequal workloads or compensation
- Denied access to financial records
- Unauthorized use of company funds
- Undisclosed transactions or conflicts of interest
- Disputes over percentages of ownership
- Breaches of an operating agreement or shareholder agreement
- Attempts to remove an owner from management
- Disagreements over selling or closing the business
- Deadlock between owners with equal voting power
These problems are especially difficult in closely held businesses where a small number of people share ownership and management responsibilities.
Review of the Governing Documents First
The operating agreement, shareholder agreement, bylaws, purchase agreement, and other company documents often determine what each owner can and cannot do.
These documents may address:
- Voting rights
- Management authority
- Ownership transfers
- Compensation and distributions
- Access to company information
- Removal of a manager or officer
- Buyout procedures
- Dispute resolution requirements
- Events that may lead to dissolution
A properly written operating agreement can provide a process for handling disagreements before they threaten the business. When the agreement is unclear, incomplete, or missing, Indiana law may determine how the dispute is handled.
Businesses that need to create or revise these documents can learn more about our contract drafting and negotiation services.
Access to Company Records
A lack of financial information is often one of the first signs of a serious ownership dispute. An owner may suspect that money has been misused, expenses have not been reported, or important decisions were made without proper approval.
Under Indiana Code Section 23-18-4-8, an Indiana LLC must maintain certain records at its principal office. These records include its articles of organization, operating agreements, recent tax returns, financial statements, and information about members and managers.
An LLC member may inspect and copy specified records after providing written notice at least five business days before the requested inspection. Additional requirements may apply to requests involving a manager-managed LLC. Corporate shareholders also have inspection rights under Indiana law, although the required process differs.
A written records request should clearly identify the information being requested and the reason it relates to the owner’s interest in the company.
Fiduciary Duties and Misuse of Business Assets
Some business disputes involve claims that a member, manager, officer, or director acted for personal gain instead of the company’s interests.
Examples may include:
- Using company money to pay personal expenses
- Diverting customers or opportunities to another business
- Concealing transactions from other owners
- Paying unauthorized compensation or distributions
- Using confidential company information for personal benefit
- Selling company property without required approval
The governing documents are important when evaluating these claims. Under Indiana Code Section 23-18-4-2, the duties and potential liability of LLC members and managers may depend in part on the written operating agreement.
A 2026 Indiana Supreme Court decision also addressed the unauthorized use of company money for personal obligations. In Harper v. S&H Leasing LLC, the Court upheld an award of treble damages involving the conversion of company funds and affirmed the related breach of fiduciary duty finding. The decision shows how serious the financial consequences may become when an owner or manager uses business assets without authorization.
Deadlock of Ownership and Loss of Company Control
A deadlock occurs when owners cannot obtain the votes needed to make important decisions. This is common in businesses owned equally by two people or two groups.
A deadlock may prevent the company from:
- Entering or ending contracts
- Hiring or removing employees
- Approving major purchases
- Making distributions
- Obtaining financing
- Selling business assets
- Continuing normal operations
The operating agreement or shareholder agreement may contain a process for breaking the deadlock. Possible solutions may include mediation, a deciding vote from another person, a buyout, or the sale of the company.
If it is no longer reasonable practicable for an Indiana LLC to carry on its business in conformity with its articles of organization or operating agreement, a member may seek judicial dissolution under Indiana Code Section 23-18-9-2. Dissolution is a significant remedy and is not the right answer for every ownership conflict.
Options for Resolving a Business Partner Dispute
Not every disagreement needs to end in court. The appropriate response depends on the agreements, ownership structure, financial records, and conduct involved.
Possible options include:
- Negotiating changes to management responsibilities
- Revising the operating agreement or shareholder agreement
- Buying or selling an ownership interest
- Using mediation to reach a private resolution
- Pursuing arbitration when required by an agreement
- Requesting access to company records
- Seeking an injunction to prevent immediate harm
- Filing claims for breach of contract or breach of fiduciary duty
- Pursuing claims on behalf of the company when the company suffered the harm
- Seeking dissolution when the business cannot continue as required
An attorney can review the available documents and determine whether the claim belongs to an individual owner, the company, or both. That distinction may affect who can bring the claim and what remedies are available.
Protect the Business While the Dispute Is Pending
Even when owners disagree, the business may still need to serve customers, pay employees, meet contract obligations, and protect its assets.
Owners should preserve relevant records, including:
- Operating agreements and amendments
- Bank statements and accounting records
- Tax returns
- Meeting minutes and written resolutions
- Emails and text messages
- Contracts and invoices
- Ownership purchase documents
- Records of compensation and distributions
Avoid deleting communications, altering company records, or taking money from business accounts without clear authority. Actions taken during the dispute may become important if the matter proceeds to mediation, arbitration, or court.
Speaking With an Indiana Commercial Litigation Attorney
Business partner disputes rarely become easier when they are ignored. Early legal guidance can help clarify ownership rights, protect company assets, and identify possible solutions before the conflict causes further disruption.
Our attorneys represent business owners, companies, shareholders, members, and managers in disputes involving contracts, company control, financial obligations, fiduciary duties, ownership interests, and business relationships. Learn more about our commercial litigation services or contact our office to discuss your situation.
