Discuss all the potential liabilities that Shania, Insight Board of Directors, Patel Family, Retail Board of Directors, and Jessie may have given the fact pattern above. Make sure to explain your reasoning and any counterarguments that you think could be made by any of the parties.

What would happen if after the acquisition went through, a former shareholder of Retail Inc sued Insight Inc. (Retail doesn't exist anymore) over the acquisition events? Would this lawsuit gain traction? Who would be liable to the shareholder?

Jessie and Shania just graduated from business school and were pretty close during their two years. They lost touch after graduation but have followed each other on social media for the past decade or so. One day at a national conference of board of directors, Jessie and Shania run into each other. Turns out Shania is CEO and chairwomen of the board of directors of Insight, Corp. (a publicly traded company that specializes in producing furniture for corporate offices). Shania has been chairwomen for the past 5 years has a very good relationship with the rest of the board. They basically rubber stamp every action she takes and under Shania's rein the company's stock has more than tripled in 5 years.

Jessie is on the board of directors of Retail Inc. Retail Inc. is a family run and owned business. The Patel family owns a majority stake in Retail Inc. They hold 35% of the company, they have the majority of the seats on the board of the directors, but a Patel is NOT the CEO of company. Retail Inc. is a brokerage company that rents out corporate offices.

Jessie and Shania reconnect over drinks at the conference and have a grand time. Shania mentions to the Jessie that Insight is looking to expand and grow and that she basically has the ear of the board. Jessie thinks that Retail Inc. may be a good acquisition strategy for Insight Inc and mentions to Shania offhand that he can try to put in a good word with the Patel's and rest of the board.

Shania is excited at the prospect of this acquisition and tells Jessie that she would make sure he would have a place in Insight if the deal should go through. Shania then goes back to her board and proposes the idea to the board. She doesn't say anything about Jessie. The board agrees and writes a below market offer for all the outstanding shares of the Retail Inc. Jessie reports this to his board, again with no mention of Shania, and recommends to the board that they take the deal. He also hires an investment banker, another buddy from B-school, to look over offer and she finds that the offer is fair.

The Patel's do not want to sell their company and they convince the rest of the board to reject Jessie's idea and move on to other matters at the board of directors meeting. Jessie is upset and goes to one of the shareholders he knows and tells him what happens. The shareholder is upset b/c the offer seemed really good. The shareholder demands to see the offer and in finding it explains to the board he intends to bring a lawsuit because the company did not have a shareholder vote on the acquisition. The board, majority run by the Patels, rejects the shareholder's lawsuit.

After rejection of the offer, Shania is really upset and takes it out on Jessie saying that their deal is off. Jessie goes back to the board and brings in an independent auditor who says that the offer is a very fair one, even though objectively it is not. The auditor had incorrectly read a few statements of Retail Inc., and provided a recommendation that the company sell itself to Insight.

After this recommendation, the board decides to accept the offer. However, when they go to accept Shania's offer, it turns on that Shania has changed her mind and lowered her offer by 20%. Even so, the board approves the acquisition getting a shareholder vote. The shareholders of Retail vote in favor of the acquisition, but the shareholders of Insight were not told about the acquisition at all.

Once the acquisition is over, all of the board of directors and managers of Retail, Inc. are fired except for Jessie. He becomes CFO of Insight Inc.

Discuss all the potential liabilities that Shania, Insight Board of Directors, Patel Family, Retail Board of Directors, and Jessie may have given the fact pattern above. Make sure to explain your reasoning and any counterarguments that you think could be made by any of the parties.

What would happen if after the acquisition went through, a former shareholder of Retail Inc sued Insight Inc. (Retail doesn't exist anymore) over the acquisition events? Would this lawsuit gain traction? Who would be liable to the shareholder?