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On December 12, 1984, the stockholders of City approved a plan of complete liquidation and dissolution which provided, inter alia, that: Within the Liquidation Period, [City] and its subsidiaries shall pay or discharge or set aside a reserve fund (the "Reserve Fund") for, or otherwise provide for, the payment or discharge of, all of their liabilities and obligations including contingent liabilities. § 337 was that the corporation wind up its affairs and distribute its assets to shareholders within one year.The Plan also provided that City could establish a liquidating trust if it were unable to completely distribute its assets within one year. City was unable to conclude its affairs within the one year period contemplated by the Plan.In response, Continental asserted a counterclaim, seeking to hold City Trust liable for indemnification.
GDC challenged the assessment by filing an action in state court in Florida.
During the reorganization proceedings, GDC and the Florida Department of Revenue reached a settlement, without notice to Continental, of the outstanding tax assessment. We believe this distinction important in view of the two principles which underlie the dissolution process under Section 278 and 279: the need for a definite period in which a corporation may pursue the ordinary winding up of its affairs; and assurance that the dissolution process not become a method for the avoidance by corporate officers and directors of their duty to satisfy the debts and liabilities of the corporation.
Under the terms of this settlement, GDC agreed to the entry of a consent judgment for the entire amount of the surety bond in exchange for the taxing authority's agreement to enforce the judgment only against the surety, i.e., Continental. In order to formalize the continued existence of corporate assets and to provide a mechanism for the assertion of claims as part of the "winding up" process, the Delaware General Corporation Law continues the corporation's existence by operation of law. By its terms, Section 278 provides an automatic extension of corporate existence for three years. The establishment of a liquidation trust is entirely consistent with the orderly winding up process contemplated by Section 278 provided it does not serve as a basis for the avoidance of corporate liabilities.
Insider trading activities including stock purchases, stock sales, and option exercises of CNVLZ listed in the above tables cannot be completely guaranteed as to their accuracy.
The Court of Chancery determined that the claim was not time-barred and was assertable under the terms of the agreement which established the trust.