Question

Michi Corp.'s board of directors has determined that the insolvent company will not be able recover financially and it is best to terminate the corporation. The board unanimously votes to dissolve and makes a recommendation to dissolve to the shareholders, but only 40 percent of the shareholders vote to approve dissolution. The shareholders insist that Michi is simply mismanaged and can be saved if the board appoints a new CEO. May the Michi board request a court to order dissolution of the company.

Answer 1

The board of directors can request a court to order the dissolution of Michi Corp. based on two main reasons:

1. The corporation is insolvent and the financial situation cannot be corrected and other parties are being negatively affected, e.g. bondholders.
2. The shareholders and the board have an unresolved conflict over corporate management.