- 9 - In July 1984 the subsidiary's accountants discovered that FF 108,000 (approximately $11,000 - $12,000 at then-current exchange rates) attributable to cash transactions was missing. WFGI's officers concluded that the funds had been embezzled by the subsidiary's resident manager. The money was never recovered. The manager left the company before the end of the fiscal year, pursuant to a settlement agreement involving a mutual release of claims and an additional payment by WFGI of $22,000. In July an artist doing business as Selene Ltd. filed suit against the French subsidiary, seeking payment of $25,500 allegedly due to him as his share of the sale price of two paintings. Having investigated the financial capacity of the subsidiary and learned that it was technically insolvent, he requested a declaration of insolvency and involuntary liquidation of the company to satisfy his claim. As the fiscal yearend approached, the officers of WFGI expected that the results for the year would again show a large loss. Moreover, despite payments to the parent by the subsidiary during the years at issue totaling more than $1.5 million, the intercompany account balance had reached its highest level since the first year of operation. A special meeting was convened on September 20, 1984, to consider the possibility of dissolving the French subsidiary. For reasons that are not clearly articulatedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011