I am very familiar with those other situations
the strong always try to take advantage of the weak until there is an uprising
whenever the dark side of Capitalism rears its ugly head - it requires pre-emptive actions and the will of the common shareholders to fight back and put things back on a level playing field
see latest Mr. Chu letter to BOD of BOX over the transfer of assets illicit profits taken and subsequent unnecessary dilutions:
December 20, 2017
Letter to Box Ships Board of Directors
Board of Directors
Box Ships – TEUFF
15 Karamanli Ave, GR 16673
Dear Board of Directors of TEUFF Box Ships :
Illicit Sale and Profits to Allseas/CEO from the transfer of Asset and Sale of Box Trader, Box Voyager and Box Maule and Subsequent Stock Dilution
Statement of Facts
Illicit profits were made from Box Ships asset Transfer to Allseas with the CEO of Box Ships making over $8,866,999 from the transfer of assets Box Ships Trader, Voyager and Maule to Allseas and then shortly selling them for a huge profit while at the same time diluting the shares of Box Ships common shareholders.
The Company wrote off $99,783,001 on these 3 ships on the books of Box Ships, negotiated with the Bank Amro to write off outstanding debts of $65,350,000 with the CEO of Box Ships assuming the remaining liability of $34,443,001 and thus clearing all debts for TEUFF for these 3 ships.
However the CEO then sold these same 3 ships for $43,300,000 ( Maule sold for $20.3 million and Box Trader and Box Voyager sold for combined $23 million) while assuming only $34,433,001 in debt liabilities and kept the sales profits at Allseas and not returning a dime to TEUFF common shareholders or re-investing it in Box Ships and at the same time diluting the shares of common stock by over 28 million new shares.
The business judgment rule's protections only apply to transactions in which a majority of directors are disinterested and independent. A director is "interested" if he or she stands on both sides of a transaction or expects to derive a material personal financial benefit from the transaction that does not devolve on all stockholders generally. When the business judgment rule's protections do not apply, the burden is placed on the BOD and its directors to prove the challenged transaction is entirely fair. When directors of a corporation are on both sides of a transaction, they are required to demonstrate their utmost good faith and the most scrupulous inherent fairness of the transaction. If directors structure a transaction that is unfair, they breach their duty of loyalty, and the Courts may provide equitable relief to remedy the injury.
To prove a transaction was entirely fair, directors must demonstrate that the transaction was (1) effectuated at a fair price and (2) the product of fair dealing was necessary or could have been effectuated another way. The fair price element relates to the economics of the transaction; it focuses on whether the transaction was economically fair to the common shareholders. The analysis of price can draw on any valuation methods or techniques generally accepted in the financial community. Fair dealing focuses on the conduct of the fiduciaries involved in the transaction. In analyzing fair dealing the Court may inquire into how the transaction was timed, initiated, negotiated, and structured, as well as how approvals of the directors and common stockholders were obtained. The entire fairness test is not bifurcated; the Court must consider allegations of unfair dealing and unfair price. Price and necessity, however, is the paramount consideration because procedural aspects of the deal are circumstantial evidence of whether the price is fair and if it was necessary or could have been executed differentially to the protection of common shareholders.
We conclude that the Transfer of Assets and Sale of Box Trader, Box Voyager and Box Maule are subject to entire fairness review. The CEO & Certain Board Members stood on both sides of this transfer of assets to the CEO with a Special Committee used as a veil in disguise to approve such a transfer and sale as legitimate and prudent. Mike in his capacity as CEO in transactions such as this, where fiduciaries deal directly with the corporation, entire fairness is ordinarily the applicable standard of review are required.
But the question before us is whether the CEO and the BOD breached their fiduciary duty of loyalty by approving the transfer of these 3 ships and making enormous profits from them in a very short period of time. As fiduciaries, CEO and the BOD are bound not to approve an interested transaction unless that transaction was entirely fair to common shareholders and to TEUFF.
It is immediately clear from the evidence offered a wealth transfer from common shareholders to the CEO affiliated entities has occurred.
Moreover, when directors then vote to issue new dilutive shares to themselves or for preferred shareholders or to new noteholders using toxic dilutive means when they stand on both sides of the transaction is improper while at the same time making illicit profits from the transfer and sale of assets at substantial profits these transactions then become willful and intentional anti-fiduciary acts against the common shareholders..
Therefore both the Asset Transfers and sales at substantive profits and the subsequent dilutive Issuances are both invalid under Delaware law because CEO and the BOD have sought to make illicit profits for the CEO and Allseas and at the same time used dilution to control the common stockholder composition for their personal and sentimental benefit at TEUFF the Company and its Common Shareholder’s expense. Thus, it fails the price and necessity element of the entire fairness test and does not advance a proper corporate purpose despite the fact a “Special Committee “ were used to approve these transactions.
The CEO and the BOD have breached their fiduciary duty of loyalty by using their power as directors and controlling common stockholders to implement an interested transaction that was not entirely fair to TEUFF the Compay and its common stockholders. The law will agree that the most appropriate remedy for a breach of fiduciary duty in this case is rescission and return the illicit profits to be re-invested back to Box Ships or its Common Shareholders and accordingly, the subsequent dilutive issuances needs to be rescinded as well from the toxic note issuance.
Conclusion and Requested Remedy
Common shareholders contends in this complaint that the Transfer of Assets Illicit Sales Profit and the Dilutive Issuances violates 8 Del. C. §§ 152 and 202(b). Having concluded that the Illicit Sales Profits from the Asset Transfers and subsequent Dilutive Issuances must be rescinded because it was not entirely fair to TEUFF common shareholders and the $ 2.7 million in unpaid receivables due TEUFF from the CEO affiliates entities should have been used instead to fund those unnecessary dilutive convertible notes and the $8.9 million in illicit ship sales profits including any additional ship chartering and ship management profits be returned to Box Ships Common Shareholders immediately either as a special dividend distribution to Common Shareholders and/or re-invested in the purchase and lease of new ships to resume operations.
Based on the foregoing findings of fact and conclusions of law, the CEO and BOD breached their fiduciary duties when they implemented the above Actions.
Sincerely,
Stephen M. Chu
Large Common Shareholder of Box Ships TEUFF 9%
