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Technology Stocks : Zenith - One and Only -- Ignore unavailable to you. Want to Upgrade?

To: Astro59 who wrote (6284)	9/11/1999 11:14:00 AM
From: Robert Utne	Read Replies (1) \| Respond to of 6570

Andy, Thanks for reminding me. This, now is objection #15 at airfarecheck.com I am not privy to the strategy being adopted by the Official Equity Committee. If the Equity Committee fails to act aggressively in the defense of Zenith, I suggest the following: I. A group of interested shareholders and bondholders file a derivative or other lawsuit against LGE in Bankruptcy Court. The lawsuit, at a minimum would seek the following relief: A. The lawsuit would seek to recharacterize the creditor claims of LG as equity investments and would seek to subordinate the equity investments of LGE to the equity investments of minority shareholders; B. The lawsuit would seek a declaration that LG is the alter ego of the Company, thereby liable for all of the Company's obligations; and C. The lawsuit would seek damages from LG, and the Company's officers and directors for breach of fiduciary duties owing shareholders. 1. Directors failed to exercise their fiduciary responsibilities to use due care to ensure that the corporation seek redress where a majority shareholder has drained the corporate resources for its own benefit to the detriment of minority shareholders (Bangot v. Bangor 1974) 2. Majority shareholders have a fiduciary responsibility to minority shareholders to use their ability to control the corporation in an equitable manner (Jones v. HF Abrhamson $ Co) 3. Shareholders must consent to sales of corporate assets that are quantitatively vital to the operation of the corporation and substantially affect the existence and purpose of the whole corporation (Gimbel v. Signal Companies, Inc 1974) 4. If there is a possibility of individual gain at the expense of the corporation, the fiduciary must establish the fairness of his dealings or is subject to liability (Perkman v. Feldman) (Sinclair Oil Corp v. Levien) 5. Self-interested vots taken by majority shareholders acting as directors may be voided in equity by minority shareholders (Zahn v. Transamerica Corporation). LGE/Zenith would answer that the "independent committee" made decision, not LGE, acting on an arm's length basis. (Kahn v. Lynch Communications). Counter argument is that there is a pattern of dominance of dissinterested directors by interested directors (Puma v. Mariott) 6. Inferences of self-dealing, fraud, deliberate waste of corporate assets or misrepresentation by majority shareholder are grounds for punitive damages (Stringer v. Car Data Systems, Inc) 7. Directors who breach a fiduciary duty to minority shareholders are liable for decreases in the value of their stock from time of their breach (Speed v. Transamerica Corp) 8. A corporation that exercises control over another corporation through election of its board of directors is liable for consequential damages resulting from a transaction between the controlling corporation and the corporation it controls (Chelrob v. Barrett) 9. A corporation controlling a majority of another corporation's board must arrange transactions consistently with its duty to preserve and protect the controlled corporation (Wright v. Heizers Corp 1977) 10. Contracts that present a conflict of interest for a director can be voided within a reasonable time at the option of the corporation (Stewart v. Lehigh Valley RR Co, 1875) 11. The presence of directors on both sides of the transaction gives stockholders the right to subject the transaction to the scrutiny of the court (Robotham v. Prudential Ins. Co of America 1903) II. File a motion to appoint a trustee. Trustees may be appointed “for cause” including fraud, dishonesty, incompetence, gross mismanagement or if such an appointment is in the interests of creditors, equity security holders, and the estate. If any Zenith investors want to work with me on this, please send me an e-mail at bobutne@aol.com asap