Reference no: EM133615347

Question

Anastasia and Elizabeth are 50% shareholders in, Pacific, Inc., a closely held corporation. Each serves as a director on the two-director board. They are parties to a shareholder agreement that provides either party a right to submit a dispute to mandatory, third-party arbitration if they are deadlocked for more than 30 days. The arbitrator is provided for in the agreement. Business has been slow due to the pandemic, and Pacific has fallen on hard times financially. It has little-to-no prospect of making a large balloon payment on its commercial mortgage that is due in ten days. Anastasia wants to protect the corporation's existing assets and ongoing business by petitioning for bankruptcy. Elizabeth refuses to consider the idea, although she has offered no alternative way forward. Anastasia thinks being able to credibly threaten judicial dissolution will convince Elizabeth to agree to file for corporate bankruptcy. She asks you to explain her likelihood of success if she asks a court to dissolve Pacific.