This article discusses the remedy of judicial dissolution in the context of an Illinois corporation facing management deadlock. The particular focus of this article is on one of the most common corporate structures for small businesses: the equally-held firm where management rights are symmetrical with ownership interests. Although courts long have described dissolution as an extreme and disfavored remedy, they have done so without reference to the particular factual context unique to deadlocked closely-held corporations. Illinois has a unique shareholder-relief statute, which illustrates when dissolution is an appropriate remedy. Based on the statutory text, I suggest dissolution is a default remedy in deadlock cases when a petitioning shareholder does not request a buy-out of her shares in the litigation and when the corporation's shareholders have failed to include deadlock avoidance mechanisms in their advance planning documents. As support, I demonstrate the motivations for why a shareholder in an equally split firm may eschew a buy-out remedy altogether and prefer dissolution.
Northern Illinois University Law Review
Vanko, Kenneth J.
"Dissolution and Rational Choice: The Unique Remedial Framework for Director Deadlock Under the Illinois Business Corporation Act,"
Northern Illinois University Law Review: Vol. 38:
2, Article 3.
Kenneth J. Vanko, Dissolution and Rational Choice: The Unique Remedial Framework for Director Deadlock Under the Illinois Business Corporation Act, 38 N. Ill. U. L. Rev. 348 (2018).