Chapter 5 - The board splits

The independent directors did not all believe me.
That helped.
Board:
Me.
Ethan.
Martin Kline.
Independent director Rachel Dunn.
Independent director Thomas Breck.
Outside investor representative Julian Morse.
Six seats.
During emergency review I recused from some conflict determinations because:
Ethan was my husband.
Vanessa had assaulted me.
My objectivity could be challenged.
Rachel Dunn chaired special committee.
Ethan was suspended from extraordinary banking authority.
Not fired.
His ordinary employment duties were temporarily limited.
Why not immediate termination?
Evidence not complete.
Then Martin Kline defended him.
“The warehouse sale is worth eight million because Cole found the buyer.”
Nora Kim checked.
Who identified buyer?
A commercial broker six months before Cole’s engagement expanded.
Cole negotiated some terms.
Useful.
Did that justify 22% of net liquidity?
Highly questionable.
Then Susan Dyer.
Internal legal manager.
She admitted reviewing amendment.
“Did Ethan tell you he and Vanessa were romantically involved?”
“No.”
“Would that have changed process?”
“Yes.”
“How?”
“I would have referred to independent committee and outside counsel.”
There.
Then:
“Did you think 22% was reasonable?”
“I thought it was aggressive.”
“Why sign?”
“I advised business team to obtain finance benchmark.”
Did they?
Ethan sent a spreadsheet.
Comparable success fees:
5%–20%.
But sources were:
Private restructuring consultants.
Distressed-debt workouts.
Not warehouse sale advisers.
Apples and construction equipment.
Then Ethan’s outside consultant, Mark Feld.
He said:
High success fees can be legitimate when consultant creates liquidity.
But Cole had not borne transaction risk.
No capital at risk.
No contingent staffing expenses.
Fee still extreme.
Then bank.
Franklin National? Let's use Meridian Commercial Bank.
The bank did not freeze all Warren accounts.
It held only the disputed $1.85 million and suspended Ethan’s extraordinary approval token under company instruction.
Payroll continued.
Vendors paid.
Warehouse closing still completed because:
Buyer.
Lender.
Company all wanted transaction.
Sale proceeds went to company escrow.
Mortgage paid.
Net held.
No operational collapse.
Then Ethan filed board demand:
Restore authority.
Pay Cole fee.
Reimburse his legal expenses under indemnification rights.
Could corporate officers receive advancement of legal fees?
Sometimes, depending bylaws and whether conduct within role.
Special committee approved limited advancement for corporate-governance defense subject to repayment undertaking if not entitled.
They did not pay his divorce lawyer.
Good.
Then he sent me a message through counsel.
May you like
Lily deserves two parents who can separate marriage from business.
I hated him for being right.