What is bet-the-company litigation?
Minneapolis attorney Scott Benson of Briol & Associates defines “bet-the-company” lawsuit.
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Really, bet-the-company litigation is any type of litigation that threatens the existence of the company. Either it’s a crucial aspect of the company’s business that could be cut off, or the judgment could be so large that it would put the company out of business. And some examples of that are minority shareholder litigation is often bet-the-company litigation because the result of the minority shareholder litigation could be the company is sold or that pieces of it are sold in order to satisfy the demands of the minority shareholder or the judgment that the minority shareholder procures.
But there’s all sorts of other examples. There’s trade secret litigation, for example. If the company is threatened with an employee who has left and taken a valuable trade secret with them, that too can be bet-the-company litigation. Intellectual property litigation often is bet-the-company litigation. If a company has an injunction imposed upon them that they cannot use the intellectual property that they depend on, that could be bet-the-company litigation. Or it could be a case where the company has entered into a joint venture and the joint venture partner decides they don’t want to pursue that any further but the company’s already committed to it. That could be a bet-the-company type of situation.