Business Partnership Disputes in New York

I’m Imke Ratschko, and I help closely held business owners in New York work through exactly these situations: sometimes through negotiation, sometimes through litigation, always with a clear plan and direct attorney access. You’ll never be passed off to junior staff or strangers. When you call, you reach me.

Below is a practical overview of partnership disputes in New York: the situations I see most often, what your rights actually are under New York law, what to do in the first thirty days, and what working with me looks like.

Common situations I help with

Most clients come to me in one of these situations:

• A business partner is taking money from the company without permission or using business funds for personal expenses.
• You’ve been frozen out of the business: locked out of accounts, removed from email, or denied access to the books and records.
• A partner has stopped contributing, not showing up, not doing their share of the work, but still expecting their share of the profits.
• Decisions are deadlocked and the business cannot move forward.
• You want out of the business, but your partner refuses to negotiate a buyout or won’t agree on a price.
• Your partner wants to force you out and you believe you’re being treated unfairly as a minority owner.
• There was never a written agreement, and now you and your partner remember the deal differently.
• You’re being sued by a business partner and need to defend yourself.

If your situation isn’t on this list, that doesn’t mean I can’t help. It just means you should call me.

These disputes come up across every industry. The legal framework is mostly the same; the facts are always different.

Why the form of your business matters

People sometimes use “partnership” as shorthand for any co-owned business, but New York treats LLCs, closely held corporations, and true partnerships under different statutes, with different remedies. The short version:

LLC members are governed primarily by New York’s Limited Liability Company Law and the operating agreement. The operating agreement, if there is one, controls almost everything, which is why reading it carefully is the first step in any LLC dispute.

Shareholders in closely held corporations are governed by the Business Corporation Law (BCL), often together with a shareholders’ agreement. New York has decades of case law protecting minority shareholders from oppression by the majority. This body of law is more developed than its LLC counterpart and often gives minority shareholders meaningful leverage.

True partnerships (general partnerships, limited partnerships) are governed by New York’s Partnership Law. Many partnerships exist without anyone realizing it. If two or more people are carrying on a business for profit, New York may treat them as partners whether or not they signed anything.

Which statute applies changes what remedies are available, how quickly they move, and what your partner can do to you. One of the first things I do at our consultation is figure out which set of rules actually governs your dispute.

Your rights as a partner, LLC member, or shareholder in New York

New York law gives co-owners meaningful rights, even when there’s no written agreement and even when the agreement you signed doesn’t address what’s happening. The most important ones:

The right to see the books and records

If your partner is hiding financial information, you almost certainly have the right to demand access. For LLC members, this right is grounded in Section 1102 of New York’s LLC Law. For shareholders, it lives in Section 624 of the Business Corporation Law. For partners, it sits in Section 41 of the Partnership Law.

All three can be enforced through a special proceeding under CPLR Article 4, meaning months, not years. This is often the first move in a partnership dispute, because it forces the other side to either come clean or come to the negotiating table. The information you get also tells you what the rest of your case looks like.

The right to be treated fairly, the fiduciary duties

Co-owners owe each other duties of loyalty and good faith. In practice, that means your partner cannot:

• Divert business opportunities to a side entity they control.
• Compete with the company while still inside it.
• Pay themselves a salary or “management fee” so large that it swallows the distributions everyone else was supposed to receive.
• Hire family members at above-market rates and call it a business expense.
• Use company credit cards, accounts, or property for personal purposes.
• Cut deals with the company on terms they would never accept at arm’s length.

When a partner does these things, they may be liable for breach of fiduciary duty, and the remedies can include money damages, disgorgement of what they took, and in some cases, removal from the business.

The right to enforce your agreement

If you have an operating agreement, shareholders’ agreement, or partnership agreement, that is a contract. A partner who breaches it can be sued for damages and, in some cases, for specific performance to force them to live up to the deal.

This is also why reading the agreement carefully matters before doing anything. These agreements often contain provisions people forget they signed: mandatory buy-sell clauses, valuation formulas that lock in a price, mandatory mediation or arbitration, forum selection, and consequences for resignation or default. The agreement can be your strongest weapon, or it can quietly take options off the table. Either way, you need to know what it says before you act.

The right to dissolution or buyout in extreme cases

When the relationship truly cannot be repaired, New York courts can dissolve the business or, in some cases, order a buyout at fair value.

For LLCs, judicial dissolution lives in Section 702 of the LLC Law. The standard is whether it is “not reasonably practicable” to continue the business in conformity with the operating agreement. New York courts read that standard narrowly: deadlock and personal animosity usually aren’t enough on their own.

For closely held corporations, a minority shareholder with at least 20% of the shares can petition for dissolution under Section 1104-a of the BCL on grounds of oppression, fraud, illegality, or waste. Under Section 1118, the corporation or the other shareholders can stop the dissolution by electing to buy the petitioning shareholder out at fair value, determined by the court. In practice, that means a dissolution petition often becomes a valuation fight, which is frequently what the minority shareholder wanted in the first place.

Dissolution is harder than ending a marriage, but it is possible, and the credible threat of it is often what brings reluctant partners to the table. Many cases that start as dissolution petitions settle long before a judge ever rules.

What to do (and not do) in the first thirty days

The decisions you make in the first month of a dispute can quietly determine the outcome. A few principles I recommend:

Do these things

• Preserve every email, text message, voicemail, and document related to the business and your partner. Back them up somewhere your partner cannot reach.
• Pull the operating agreement, shareholders’ agreement, or partnership agreement, and read it carefully, especially the parts about buy-sell, valuation, dispute resolution, and termination.
• Make a written timeline of what has happened, with dates. Memory fades fast under stress.
• Note the date of every lockout, removed access, missing payment, or other incident. These dates matter for statutes of limitations and for proving a pattern.
• Talk to a lawyer before talking to your partner about the dispute. Anything you say or write can end up in front of a judge.

Do not do these things

• Do not resign your position, your title, or your membership. In some cases, resigning can extinguish rights you’d otherwise have.
• Do not sign anything your partner sends you, especially anything that looks like a release, an amendment to the agreement, or an acknowledgment of any kind.
• Do not make personal withdrawals from business accounts, even if you believe you are owed the money. This can be turned against you as conversion or breach of fiduciary duty.
• Do not delete emails, texts, or files. Even routine cleanup can later look like spoliation.
• Do not vent on social media, in industry groups, or to mutual contacts. Assume everything you say will be read by your partner’s lawyer.

What I actually do for clients

Every partnership dispute is different, but the work usually breaks into three phases.

1. Investigation and strategy

Before anything else, I sit down with you and go through the documents that drive the case: the operating agreement, the key emails and texts and financial records. I want to understand what actually happened, what the agreement actually says, and what leverage you actually have. By the end of that conversation, you should know what your actual options are and which one makes sense to try first.

2. Pressure without unnecessary litigation

Lawsuits are expensive and slow. Whenever possible, I try to bring the other side to the table first, through a carefully drafted demand letter, a books-and-records request, or settlement negotiations, before I spend your money on a complaint. Many cases settle on favorable terms before a lawsuit is ever filed. A well-drafted Section 1102 or Section 624 demand alone is often enough to bring the other side to the table.

3. Litigation when it’s the right move

When negotiation fails or when the other side is acting in bad faith, I go to court, for preliminary injunctions to stop ongoing harm, for dissolution or buyout, for damages, or to defend you against an unjust claim.

What it’s like to work with me

A few things to know about how I work:

You work directly with me. I run a small practice on purpose. The legal work on your case is done by me, and you deal with me directly throughout.

I have represented both sides of these disputes. I have been on the majority side and the minority side, the side bringing the claim and the side defending it. It means I have a realistic sense of how the other side is likely to play it.

Honest cost conversations from day one. Litigation can be expensive. I will tell you what I expect a matter to cost, what variables could change that, and whether the case is worth bringing in the first place. If the math doesn’t make sense, I will say so.

Plain-English communication. You will never get a letter from me full of “heretofore” and “notwithstanding.” If you don’t understand what’s happening in your case, that’s my failure, not yours.

Strategic, not reflexive, litigation. It bothers me to spend a client’s money on work that isn’t going to change the outcome. That is the discipline I try to bring to every case. Before I send a letter, file a motion, or take any step that runs up a bill, I want to know what it is for and whether there is a smaller move that gets you the same result. Often there is: a well-timed letter, a books-and-records demand, a quiet buyout offer, instead of a complaint that sets off two years of war. When litigation is genuinely the right move, I will tell you and we will go. But I will not bill you for work I do not think is worth what it costs you.

Why you still need a lawyer (even though you can look most of this up)

A lot of clients come to me having already done real research. They have read the statutes. They have asked ChatGPT or another AI. They have a working theory of what is happening to them and what their options are. Sometimes their research is good. Often, the answers they have collected are technically correct but practically misleading, for three reasons.

You don’t always know which question to ask

The most consequential issues in a partnership dispute are almost never the ones a non-lawyer thinks to ask about. A client asks me whether they can sue for the money their partner took. The real question, which they didn’t know existed, is whether their operating agreement has a mandatory mediation clause that pushes them out of court for six months and weakens their leverage. Or whether resigning their officer title two weeks ago, which they did to “protect themselves,” gave up rights that would have been worth six figures. AI answers the question you typed. It does not flag the questions you didn’t know to type.

General answers don’t tell you what to do in your specific situation

“You have a right to inspect the books under §1102” is correct, and an AI will give you that answer quickly and accurately. But the answer that matters is whether to actually file that petition next week, or to send a quieter demand letter first, or to wait until you have more documentation in hand. That depends on facts about your case, your partner, your industry, and your goals that no general-purpose tool can weigh. Getting the law right is the easy part. Knowing what to do with it in your specific situation is the part you’re paying me for.

Interpreting an answer is harder than getting one

Most legal questions return a range of possible outcomes, not a single answer. Whether you “have a case” for breach of fiduciary duty depends on what the evidence actually shows, how it will look to a Commercial Division judge, what your partner’s likely defenses are, and what they have at risk. A client reading the law on their own typically lands in one of two places: convinced they have a slam-dunk case, or convinced they have nothing. Both are usually wrong. The work is in the middle, and the middle is where experience matters.

Someone is accountable for the advice

When a lawyer tells you what to do, the lawyer is responsible for that advice. We carry malpractice insurance. We are bound by ethical rules. We have a professional reputation that depends on getting it right. AI has none of that. If an AI tells you to send a particular letter, file a particular motion, or take a particular position, and that turns out to be the wrong move, there is no one who answers for it. You do. That accountability is part of what you are paying a lawyer for, and it is one of the few things in this work that cannot be replicated by a tool.

There is one more thing I have noticed. Clients who have done their own research usually come in with a strategy already in mind. About half the time, after we have looked at the documents and the facts together, the strategy they walked in with is not the one they walk out with. That is not because they were wrong to do the research; it is because once you are inside a dispute, you can’t see it clearly. That is what I am actually for: a clear-eyed second look from someone who has watched these disputes play out.

And one more thing about privilege

Anything you type into an AI tool, share with a friend, or post in an online forum is generally not protected by attorney-client privilege. That is the practical point most people don’t think about until it matters.

If your dispute ends up in court, both sides have the right to demand each other’s relevant documents and communications: emails, texts, and yes, potentially your AI chat history. The questions you asked, including the unflattering ones, can in principle become part of the record. Imagine asking an AI, in a moment of frustration, whether you can take money out of the business account to make up for what your partner has been taking. The AI may well tell you no, but now there is a written record of you contemplating exactly the thing your partner’s lawyer would love to accuse you of.

Conversations with me are different. They are confidential and privileged from the first phone call, even before you have decided whether to hire me. That protection is one of the most underrated things a lawyer gives you.

Frequently Asked Questions

Talk to me

If you’re dealing with a partnership dispute in New York and want to talk it through, I’d be glad to hear from you. The initial consultation is free, confidential, and not a sales call. We will spend twenty or thirty minutes on the phone or on video. You will tell me what is happening. I will ask the questions that matter, give you my honest read on where you stand, and tell you whether you actually need a lawyer right now. If you do, I will tell you what working with me would look like and what it would cost. If you don’t, I will tell you that too.

Most people who call me have been sitting with this for a while, hoping it would resolve on its own. It almost never does. The earlier you talk to someone, the more options you have.

Call: 212-253-1027

Email: [email protected]

Or fill out the contact form below and I’ll get back to you within one business day.