A manufacturing corporation in a small eastern city had been built up over a long period of years by its president and general manager. It was originally owned by the president as an individual but later was incorporated and shares were taken by some of his leading officials. At the time of his death the business was capitalized at $600,000, of which the president owned $489,000, the general manager - who had become the active operating head of the plant - $80,000, and the remaining shares were scattered among other operating officials. After the president's death his estate was handled by trustees who were desirous of putting the property into a well-secured form and did not wish to take any active part in the management of the business. On the other hand, the general manager was anxious to obtain control. Under these conditions, it was determined that the shares held in the president's estate should be exchanged in part for bonds of the corporation and in part for preferred shares. Inasmuch as the executors of the estate desired to withdraw a large part of the capital from the business in order to make a more diversified investment, it was further determined that the corporation and the executors should co-operate in carrying through a sale, to outsiders, of the preferred shares held by the estate.

A new corporation was then organized which issued $200,-ooo in bonds, $200,000 in preferred shares, and $200,000 in common shares, and which gave its securities in exchange on an agreed basis for the common shares of the old company. The estate was still left with a small block of common shares upon which the general manager took an option. In the meantime, in order to secure his control, a voting trust agreement was entered into which gave the general manager full power to name a majority of the board. A sales campaign was then started to dispose of the preferred shares. Inasmuch as the corporation took part in the campaign, it was conducted in such a manner that no injury to the credit of the corporation resulted. It is understood to have been entirely successful. The general manager has exercised his option for the purchase of the estate's holdings of the common shares; and the final result, therefore, is highly satisfactory to all parties concerned.

The various purposes of reorganization are so numerous that they cannot all be discussed. The general principles set forth and illustrated in this chapter, however, can always be utilized. Unless there is deliberate unfairness or stupidity on the part of some of the interests concerned, it is always possible to work out a scheme of readjustment or reorganization that will serve the best interests of all parties.