Would shareholder of consolidated have any grounds

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Reference no: EM132236631

Frank Fowl (Fowl) was the President of Consolidated Chicken, Inc., a publicly traded corporation. Fowl was a friend of Bill Bird (Bird), who was President of Amalgamated Chicken, Inc., a privately owned corporation. Fowl and Bird discussed Consolidated buying out Amalgamated and came to an agreement for the buyout. The price term in the agreement was reached without any investigation into the finances of Amalgamated. Fowl and the Board of Directors of Consolidated did not review any financial statement of Amalgamated, nor did they do any audit of Amalgamated before the buyout agreement was reached. The Board of Directors of Consolidated approved and "rubber stamped" the buyout agreement without any investigation into Amalgamated's finances. After the buyout it was determined that Amalgamated was deeply in debt and worth about 10 percent of the purchase price.

(a) Would a shareholder of Consolidated have any grounds on which they could sue Fowl and the Board of Directors of Consolidated, yes or no?

(b) If so, name and describe the grounds for the suit. If not, why not?

Reference no: EM132236631

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