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How Corporate Law Helped Dragon Con

Aug 28

Written by:
8/28/2013 10:34 PM  RssIcon

HOW CORPORATE LAW HELPED DRAGON CON

As most of you know, this weekend Dragon Con - Atlanta’s massive and internationally known pop culture, fantasy and science fiction convention - will take over downtown Atlanta.  Last year this convention drew over 50,000 attendees, a great many of them dressed in elaborate science fiction and fantasy costumes.  Pieces of the Dragon Con convention will be hosted by each of the Hyatt Regency Atlanta, the Atlanta Marriott Marquis, the Hilton Atlanta, the Sheraton Atlanta Hotel, and the Westin Peachtree Plaza Hotel.

This year’s convention may be a little better attended thanks to a corporate law procedure commonly called a “squeeze-out merger”. 

Dragon Con is a for-profit venture originally launched by six founders in 1987.  One of the founders, Edward Kramer, has become a very controversial figure, being the subject of a long-running legal battle alleging child molestation.  Aside from being a source of embarrassment, some attendees of Dragon Con had threatened to boycott the convention so long as Kramer profited from it.  Kramer’s co-founders had offered to purchase his interest on multiple occasions in the past, to no avail.

So what can you do when you have a minority owner who has become a liability?  Enter the squeeze-out merger. 

Dragon Con was run by Dragon Con / ACE, Inc., a Georgia corporation.  The shareholders of Dragon Con /ACE, Inc. voted to merge Dragon Con / ACE, Inc. with a new Georgia corporation, Dragon Con, Inc., effective July 8, 2013. Here’s the key, and how a “squeeze-out merger” (also called a “freeze out merger”) works.  In a merger of two companies, there will be a plan of merger that dictates what each owner of each company will receive in exchange for its interest.  Under the terms of the Dragon Con merger, all of the owners of Dragon Con / ACE, Inc. other than Edward Kramer received shares of the new corporation in exchange for their shares of Dragon Con / ACE, Inc.  Edward Kramer, on the other hand, received cash for his shares and no ownership interest in the new company.  This amounted to a forced cash buyout of Edward Kramer.  If you have the required number of votes you can do this, subject only to the bought-out owner being able to contest whether it was paid a fair price for its interest.

And that, boys and girls, is why I might have to fight crowds that are a little bit bigger when I take my 15 year-old son to see Dragon Con this weekend.

What would any written material coming from a lawyer be without a disclaimer?  Here it comes: This advisory contains general information only.  It is not intended to be and should not be relied upon as legal advice for any specific situation.  Your mileage may vary.  Offer void where prohibited.

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