Our client found themselves entangled in a corporate mess. The client recently took over a publicly traded company that needed to be brought back into compliance with the OTC Markets and the Securities and Exchange Commission. The equity needed to be restructured. Hostile directors and shareholders were attempting to strip the corporation of its value, control of the company was uncertain, and the ability to raise money using publicly traded stock was at issue. In sum, many obstacles — and pending lawsuits brought by former directors and officers — that had to be overcome to make this company a success.
Despite some very aggressive and hostile shareholders, we made a risky move. We issued proxies and called a formal shareholder meeting. The meeting was slight in attendance but a quorum was reached. The shareholders voted in a friendly board and the board went into executive session after the shareholder meeting and worked on a plan to restructure the equity for the benefit of all shareholders.
We assisted the client with restructuring the corporate equity using preferred shares and the newly inaugurated board. In doing so, we helped to protect the client from hostile shareholders.