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Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson
Edition 19ISBN: 978-1305654921Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson
Edition 19ISBN: 978-1305654921 Exercise 17
Paul Nielsen was the founder and sole shareholder of Clever Innovations Inc. His wife, Gwen, was elected vice president and treasurer. The couple operated the business from their home, with Gwen handling the financial affairs. Sometime later, the Nielsens issued 100 shares of stock to Christopher Dooley, thereby giving him ownership of 50 percent of the company. Dooley was not formally elected as an officer or director but participated in the ongoing business operations of the company. After Paul Nielsen's death, Gwen became the administrator of her husband's estate, which included his stock in Clever Innovations. Relations between Gwen and Dooley quickly soured. The two reached a temporary arrangement whereby Dooley would run the business and inform Gwen of financial considerations. In the meantime, the two agreed to work toward a sale of the estate's half interest in the corporation to Dooley. However, a short time later, Dooley opened up a new bank account for the corporation and funded it with $280,000 from existing customers. Dooley redirected mail to be sent to his home and ignored Gwen's communications related to the sale of the estate's stock in the company. Gwen sued on behalf of the estate, alleging that Dooley's actions were oppressive to the other shareholder. Gwen sought dissolution of the corporation and a mandatory buy-out of the estate's shares for a fair market price. Should the court order dissolution?
Explanation
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Dissolution of a firm: Dissolution refer...
Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson
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