## Facts

- Ebro Foods, Inc. (Ebro) was a closely held corporation with two 50% shareholders: Zenaida Abreu (Abreu), who was also Ebro’s president, and La Preferida, Inc. (La Preferida).
- Ralph and William Steinbarth (the Steinbarths) co-owned La Preferida and were its only directors.
- Ralph Steinbarth formed Unica Industrial Sales, Inc. (Unica) to compete with Ebro for Kraft Foods’ business.
- Abreu filed a shareholder derivative action against the Steinbarths, La Preferida, and Unica, alleging misconduct affecting Ebro.
- The trial court found oppressive conduct and fraudulent self-dealing, removed Ralph Steinbarth as a director of Ebro, and found that the Steinbarths and La Preferida breached fiduciary duties.
- As part of the relief, the trial court ordered that Ebro have an additional director to oversee the reconstituted board and break deadlocks between the two board representatives (Abreu and La Preferida’s candidate).
- The court appointed Silvio Vega as the provisional director. Vega was Abreu’s son-in-law, had worked for Ebro for more than 17 years, was familiar with its operations, held a CPA credential, and understood the history of the Ebro–La Preferida relationship.
- The Steinbarths and La Preferida appealed, arguing (1) the appointment violated the statutory requirement that a provisional director be “impartial,” and (2) the trial court should have removed Vega because he acted inconsistently with his duties as provisional director.

## Issues

1. Whether the statutory requirement that a court-appointed provisional director be “impartial” bars appointing a person who has a prior relationship with, or personal connection to, one shareholder.
2. Whether the trial court erred in refusing to remove the provisional director based on allegations that he acted inconsistently with the responsibilities of the position.

## Decision

- The appellate court affirmed.
- The court held that the statute’s “impartial” requirement does not require selecting a stranger to the corporation or someone with no prior ties to either shareholder; the trial court may appoint a qualified person who can act fairly and for the corporation’s benefit.
- The court concluded that appointing Vega was within the trial court’s discretion given his long employment with Ebro, financial training, and knowledge of the company’s affairs, despite his family relationship to Abreu.
- The court also upheld the trial court’s refusal to remove Vega, deferring to the trial court’s supervision of the provisional director and finding no basis to disturb the decision on the record presented.

## Legal Principles

- In a deadlocked closely held corporation, a court may appoint a provisional director to break board deadlocks and stabilize corporate decision-making when statutory conditions are met.
- A statutory requirement that a provisional director be “impartial” is satisfied when the appointee can act fairly and in good faith for the corporation; it does not automatically disqualify a candidate because of past employment, familiarity with the company, or a personal relationship with one shareholder.
- Appointment and removal of a provisional director are matters committed to the trial court’s discretion, and appellate review is deferential absent a clear showing of error.
- Allegations that a provisional director performed poorly or favored one side do not, without sufficient proof of improper conduct or failure to carry out the court-assigned role, require removal.

## Conclusion

Abreu v. Unica Indus. Sales, Inc. affirms that, in addressing deadlock in a closely held corporation, an Illinois court has broad discretion to appoint a provisional director who can act fairly for the corporation even if that person has prior ties to one shareholder, and it also confirms that a trial court’s decision not to remove the provisional director will be upheld absent a strong record showing misconduct or disqualifying bias.


Abreu v. Unica Indus. Sales, Inc., 586 N.E.2d 661 (1991)