Bo Red operated Bo’s Appliance, a retail appliance business, from premises he was leasing. He sold his complete inventory to a competitor, Mom's Appliance Warehouse Inc., for $100 000. He then carried on business from the premises devoted solely to selling compact discs, records, and DVDs. This business operation was greatly diminished from the previous appliance operation. The creditors of Bo in relation to the appliance business are unpaid and just now discover, two months after the sale to Mom's Appliance, that Bo is no longer in the appliance business. What remedies, if any, do Bo's Appliance’s creditors have?
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What conditions must be satisfied by the seller of unpaid goods in order to repossess them from a bankrupt business?
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What is the difference between a bankrupt person and an insolvent person?
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What is meant by the indoor management rule?
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Explain how directors and senior officers can be held liable when the corporation commits a criminal offence.
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Explain why the insolvency and maintenance of capital tests are important when it comes to corporations.
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The Delphi Corp. owns 60 percent of Lynden Sand & Gravel Inc. Delphi, with its voting power, elected all three directors on Lynden's board. Then the board decided to sell one of Lynden's gravel reserves to Delphi at only half its value. As a minority shareholder in the Lynden corporation, how have you been affected by this transaction?
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What duties do directors owe to shareholders of the corporation?
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Which is more preferable: a simple shareholder agreement or a unanimous shareholder agreement? Why?
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Milton Brown is a business consultant who obtained confidential information about a publicly traded corporation which, if made public, would cause the stock to rise dramatically. Milton formed a private corporation with himself as the sole shareholder and director and had that corporation purchase stock in the publicly traded corporation. When the news that Milton was already aware of became public, the price of the publicly traded shares increased dramatically and the corporation Milton had formed sold its shareholdings at a substantial profit. Milton is subsequently charged with insider trading, that is, using confidential information for his own personal gain. His defence is that the gain was made by his corporation and not by himself and that his corporation is a separate legal entity. Will Milton's defense be successful? Give the legal basis for your answer.
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