The XYZ Corporation intends to redeem its preferred stock. The company has only

Question

The XYZ Corporation intends to redeem its preferred stock. The company has only $10,000 in cash, and it intends to use it a1 1 to redeem part of its outstanding $100 par stock. Several creditors of XYZ seek to enjoin the redemption alleging that XYZ ill have no money with which to pay its debts. Can the corporation redeem the stock? xin 12. 13. Abby is a dissenting shareholder to a merger between corpora- tions X and Y. Abby wants nothing to do with the new corpora- tion and wishes to get her money back. The state in which both corporations are located follows the Model Act. Abby does nothing for 45 days, then seeks payment for the shares. Is Abby entitled to payment? Explain. 14. A "short-form merger" takes place between parent Corporation X and subsidiary Corporation Y. Do the dissenting shareholders of each corporation have the right to an appraisal remeds? Explain

Explanation / Answer

12.

Yes; the company can redeem the stock; there is no legal barrier.

Stock is an ownership rights. If the company goes into liquidation then the question of payment arises; on that time debts are paid earlier than owners. But in this case such thing is not happened. Deciding to redeem stocks is just company’s internal activity, which is done by board of directors. Outsiders can’t interferer on such except making allegation.

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