Case summary: Two people JK and MT were involved in a case in a Texas state court. Both of them alleged each other for fraud and misconduct to obtain the control of the company C. The person JK formed a company KR whose most of the shareholders were that of the company C. Meanwhile, he filed a petition for Chapter 7 liquidation in the bankruptcy court and failed to inform the court about his interest in the company KR. Though the person JK’s share belonging to that of the company C was passed to the bankruptcy trustee, he called a meeting of the shareholders of the company C in which the person MT was not included and voted those shares for removing the person MT from the board. The company C board then dismissed the company C’s claims against the person JK in the case with the person MT.
To find:The sufficient grounds for the bankruptcy court to dismiss the person JK’s bankruptcy petition.
Want to see the full answer?
Check out a sample textbook solutionChapter 15 Solutions
The Legal Environment of Business: Text and Cases (MindTap Course List)
- Muller, a shareholder of SCM, brought an action against SCM over his unsuccessful negotiations to purchase some of SCM’s assets overseas. He then formed a shareholder committee to challenge the position of SCM’s management in that suit. To conduct a proxy battle for management control at the next election of directors, the committee sought to obtain the list of shareholders who would be eligible to vote. At the time, however, no member of the committee had owned stock in SCM for the six-month period required to gain access to such information. Then Lopez, a former SCM executive and a shareholder for more than one year, joined the committee and demanded to be allowed to inspect the minutes of SCM shareholder proceedings and to gain access to the current shareholder list. His stated reason for making the demand was to solicit proxies in support of those the committee had nominated for positions as directors. Lopez brought this action after SCM rejected this demand. Will Lopez succeed?arrow_forwardExplain limited-liability company (LLC).arrow_forwardKlinicki and Lundgren, both furloughed Pan Am pilots stationed in West Germany, decided to start their own charter airline company. They formed Berlinair, Inc., a closely held Oregon corporation. Lundgren was president and a director in charge of developing the business. Klinicki was vice president and a director in charge of operations and maintenance. Klinicki, Lundgren, and Lelco, Inc. (Lundgren’s family business), each owned one-third of the stock. Klinicki and Lundgren, as representatives of Berlinair, met with BFR, a consortium of Berlin travel agents, to negotiate a lucrative air transportation contract. When Lundgren learned of the likelihood of actually obtaining the BFR contract, he formed his own solely owned company, Air Berlin Charter Company (ABC). Although he continued to negotiate for the BFR contract, he did so on behalf of ABC, not Berlinair. Eventually BFR awarded the contract to ABC. Klinicki commenced a derivative action on behalf of Berlinair and a suit against…arrow_forward
- Smith, a shareholder, filed suit against the board of directors of a corporation in which he had owned stock. Smith claimed that he and other shareholders had not received top dollar for their shares when their corporation had merged with another. Consequently, they sought either a reversal of the merger or payment from the directors to make up for their losses. The directors, Smith argued, had violated their duty of due care because they based their decision on a 20-minute speech by the CEO. Also, the directors had not even looked at the merger documents, let alone studied them. Furthermore, the directors had not sought any independent evaluation by outside experts. For their part, the directors argued that because their decision was made in good faith and was legal, they were protected by the business judgment rule. Were the directors correct?arrow_forwardPritchard & Baird was a reinsurance broker. A reinsurance broker arranges contracts between insurance companies so that companies that have sold large policies may sell participations in these policies to other companies in order to share the risks. Charles Pritchard, who died in December 2011, controlled Pritchard & Baird for many years. Prior to his death, he brought his two sons, Charles Jr. and William, into the business. The pair assumed an increas ingly dominant role in the affairs of the business during the elder Charles’s later years. Starting in 2008, Charles Jr. and William began to withdraw from the corporate account ever-increasing sums that were designated as “loans” on the balance sheet. These “loans,” however, represented a significant misappropriation of funds belonging to the corporation’s clients. By late 2013, Charles Jr. and William had plunged the corporation into hopeless bankruptcy. A total of $12,333,514.47 in “loans” had accumulated by October of that…arrow_forwardThe pre-emptive rights of stockholders in a corporation are not statutory rights, but are ____________ and exist even when no specific grant or recognition of such right is provided for in statutory law. inherent rights common law rights provided by the Corporation Code implied rights A share held by a third person to be released only upon the performance of a condition or the happening of a certain event contained in the agreement. Common share Preferred share Escrow share Treasury share One of the attributes of a corporation is that it is an artificial being with a separate personality. As a result of this attribute, the corporation: is not liable for torts committed by its officer or agent. is liable for torts committed by its officer or agent. is liable for torts by its stockholders. is liable for torts committed by its stockholders and officers or agents. The “Grandfather Rule” in Corporation law means that: corporate stockholdings would be traced from the nationality of the…arrow_forward
- Xavier and Ciara form a corporation to provide cleaning services to local businesses. After two years of trying to make a go of the business, the profits they had hoped for are just not there. Xavier and Ciara decide to dissolve the corporation and go their separate ways. To terminate the corporate entity, Xavier and Ciara must: Choose three. -Pay the corporate debts and distribute remaining funds to themselves -File articles of dissolution with the state -Seek a court order for dissolutoin -Vote to terminatearrow_forwardIf within 60 days from the approval of corporation action by stockholders, the dissenting stockholder and the corporation cannot agree on the fair value of the shares, who shall determine the price of shares? * Three disinterested persons, one named by the stockholder, another named by the corporation and the third chosen by the two whose decision by majority is binding and final The dissenting shareholder The Securities and Exchange commission The Commercial Courtarrow_forwarddescribing a Limited Liability Company (LLC) business that would created. Indicate a specific provisions that would be include in the LLC's Articles of Organization.arrow_forward
- Merrill Lynch employed Post and Maney as account executives. Both men elected to be paid a salary and to participate in the firm’s pension and profit-sharing plans rather than take a straight commission. Thirteen years later, Merrill Lynch terminated the employment of both Post and Maney. Both men began working for a competitor of Merrill Lynch. Merrill Lynch then informed them that all of their rights in the companyfunded pension plan had been forfeited pursuant to a provision of the plan that permitted forfeiture in the event an employee directly or indirectly competed with the firm. Is Merrill Lynch correct in its assertion? Why or why not?arrow_forwardEiffel Towers Ltd, a listed company, was a builder and property developer specialising in projects in Melbourne’s central business district. It has five directors. Giscard (Eiffel Towers Ltd’s managing director) and Henri (the company’s chief finance officer), were the only executive directors on the board. The others, all experienced business people, were non-executive directors and attended the monthly board meetings. Over the past two years, Eiffel Towers Ltd’s financial position had worsened. Apart from Henri, the directors were unaware that Eiffel Towers Ltd’s liabilities vastly exceeded its assets and that it had difficulties paying its subcontractors and suppliers on time. Henri made sure the other directors were kept in the dark about this and did not give them meaningful or accurate financial information. The directors were satisfied with Henri’s false assurances that the company’s finances were satisfactory. Several months ago at an Eiffel Towers Ltd’s board meeting Giscard…arrow_forwardSpence was a promoter in the incorporation of a new business. The new corporation had not yet been formed when he bought Huffman’s employment agency to serve as the nucleus of that corporation. Eventually, the corporation was formed, but it never generated enough cash to pay Huffman for the employment agency. Huffman sued Spence, attempting to hold him personally liable for the amount due. Spence claimed that the corporation was liable and that his personal assets were not a proper target of the suit. Was Spence correct? Explain.arrow_forward
- BUSN 11 Introduction to Business Student EditionBusinessISBN:9781337407137Author:KellyPublisher:Cengage LearningEssentials of Business Communication (MindTap Cou...BusinessISBN:9781337386494Author:Mary Ellen Guffey, Dana LoewyPublisher:Cengage LearningAccounting Information Systems (14th Edition)BusinessISBN:9780134474021Author:Marshall B. Romney, Paul J. SteinbartPublisher:PEARSON
- International Business: Competing in the Global M...BusinessISBN:9781259929441Author:Charles W. L. Hill Dr, G. Tomas M. HultPublisher:McGraw-Hill Education