Fact Pattern 41-3A (Questions A19-A20 apply)
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 41-3A.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

Quizplus · Accepted Answer

Given the facts that Atlantic's officers sold assets without proper authorization, failed to pay taxes on time, and did not account for some funds, it appears that Atlantic's officers breached their fiduciary duties to the corporation. Therefore, Atlantic's dissolution is the most appropriate remedy as it would wind up the affairs of the corporation and provide a fair distribution of any remaining assets to the shareholders. A sale of the rest of the assets to the directors and shareholders or a consolidation/merger with Pacific would not address the harm caused by the officers' actions and may not be in the best interests of the corporation and its shareholders. Payment of damages to the officers would not be appropriate given their breaches of fiduciary duties.

Fact Pattern 41-3A (Questions A19-A20 Apply)