Fact Pattern 40-3A
Atlantic Corporation's articles of incorporation prohibit a sale of its assets with?out a vote of the board of directors. Atlantic's officers sell some assets to Pacific Company without notice to the board. The officers also fail to pay Atlantic's taxes on time, and some Atlantic funds are not accounted for.
-Refer to Fact Pattern 40-3A. The appropriate remedy is most likely
A) a sale of the rest of Atlantic's assets to its directors and shareholders.
B) Atlantic's consolidation or merger with Pacific.
C) Atlantic's dissolution.
D) payment of damages to Atlantic's officers.

Question

Fact Pattern 40-3A 
Atlantic Corporation's articles of incorporation prohibit a sale of its assets with?out a vote of the board of directors. Atlantic's officers sell some assets to Pacific Company without notice to the board. The officers also fail to pay Atlantic's taxes on time, and some Atlantic funds are not accounted for.
-Refer to Fact Pattern 40-3A. The appropriate remedy is most likely
A) a sale of the rest of Atlantic's assets to its directors and shareholders.
B) Atlantic's consolidation or merger with Pacific.
C) Atlantic's dissolution.
D) payment of damages to Atlantic's officers.

Quizplus · Accepted Answer

Atlantic Corporation's officers violated the articles of incorporation and acted against the interests of the corporation by selling assets without the required board vote and failing to pay taxes and account for funds. As a result, the appropriate remedy is likely to be Atlantic's dissolution, as the corporation cannot continue to function with such breaches of fiduciary duty by its officers. A sale of the rest of Atlantic's assets to its directors and shareholders or payment of damages to the officers would not adequately address the harm caused to the corporation. Atlantic's consolidation or merger with Pacific would also be inappropriate, as it would reward Pacific's participation in the officers' misconduct.