CORPORATIONS-DISSOLUTION-DISTRIBUTI0N OF ASSETS BETWEEN HOLDERS OF FULLY AND PARTIALLY PAID STOCK

Authors

Abstract

On the insolvency of the Commonwealth Hotel Construction Co. and after, the creditors had been paid in full, there were assets on hand for distribution among the stockholders. The holders of partially paid stock requested that the assets be distributed in proportion to the amounts which the various stockholders had paid in. This in effect meant that the losses were to be proportional to the amounts paid in, instead of being proportional to the amounts which the stockholders had contracted to pay, and was resisted by the holders of fully paid stock as being inequitable. The chancellor (after holding in accordance with Grone v. Economic Life Insur. Co. (Del. Ch., 1911) 80 Atl. 809 that those who had paid a premium in excess of the original price of the stock were in no better position than those who had paid the original price) decreed that the distribution must make losses proportional to the amounts contracted for, and not the amounts paid in. To secure that he decreed that there must be a call upon all holders of partially paid stock to pay in the balance due upon their stock. This was to be done largely through bookkeeping adjustments. The balance was then to be distributed pro rata among. the stockholders. Penington v. Commonwealth Hotel Construction Co. (Del. Ch., July, 1930) 151 Atl. 228.

Recommended Citation

CORPORATIONS-DISSOLUTION-DISTRIBUTI0N OF ASSETS BETWEEN HOLDERS OF FULLY AND PARTIALLY PAID STOCK, 29 Mich. L. Rev. 249 (1930).
Available at: https://repository.law.umich.edu/mlr/vol29/iss2/18