978-1285770178 Case Printout Case CPC-05-08 Part 3

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; ; .

minutes and certificates of incumbency, created throughout this period,

acknowledge and confirm Reuther as CEO. JES acknowledged that Reuther had

business cards and stationary with the designation of CEO of the Hospitality

Companies. JES also admitted that Reuther was roundly heralded by both

employees within the organizations, as well as the public, as CEO of the

Hospitality Companies. In a Gaming Control Board Application filed by NOP,

Reuther is listed as CEO. Even JES’ law firm addresses him in correspondence

as CEO and corporate contracts were edited by counsel specifically for the

purpose of correcting his title as such. Finally, it goes without saying that

Reuther had a substantial financial interest in the Hospitality Companies. This

WLR Exh. 6.13, 6.14, 6.15.

WLR Exh. 8.18.

The Bylaws specifically provide that the board may, at its discretion, appoint such

other officers as it shall deem necessary. Once elected, the officer serves at the

boards’ pleasure until removed by an affirmative vote of a majority of the board.

as a “specialist” in corporate law, would certainly have taken action to prevent

those dealing with the Hospitality Companies from being misled. At a minimum,

by allowing one cloaked with only apparent authority to hold himself out as CEO

to the public, JES was in effect ratifying his actions as such.

Tr.T. at 117.

JES as President

While Reuther is the CEO of the Hospitality Companies, JES is clearly its

president. Elected in January of 1999, JES has consistently been referred to in

minutes of shareholder and director meetings, corporate records, and other

documents as the president. Although Reuther argues that JES’ term was to be

However, for the reasons stated, it is without effect.

WLR Exh. 3.12

The Relative Powers and Duties of the CEO, President, Board of Directors and

Executive Committee

Having determined who sits on debtor’s board and holds its managerial offices,

approvals to submit a plan for consideration. If it can not, the appointment of a

trustee would be in order.

The activities and powers of the board, and a corporation’s officers, may be

gleaned by custom and history. The duties of board and officers are broadly

defined under Louisiana law. The board is the primary agent for the

The office of president, itself, confers no power to bind the corporation or control

its property in and of itself.

But who controls the right to formulate and present a plan of reorganization?

the corporation. The president shall see that all orders and resolutions of the

board are carried into effect. The president *690 shall have the duties of

supervision and management, including the sole authority to hire and fire

employees, and generally all matters having to do with the normal day to day

operations of the business.

sometimes the shareholders, reserved for themselves, the authority to

specifically authorize actions, on a case by case basis, outside the ordinary

course of business.

for the long term vision of the company is closer to the authority to formulate a

plan of reorganization, without a specific resolution to reorganize debt, incur new

borrowings, or sell substantial assets, this Court can not find that a general grant

to direct the company’s progress includes the right to present a plan of

reorganization.

Debtor cites the Court to as authority for the principle that the president is

authorized to present this debtor’s plan. The applicability of turns on the power

of NOP’s executive committee to authorize the president to so act.

Powers of the Executive Committee

JES argues that under the Bylaws, the executive committee, composed of the

Under Louisiana law, a board may form committees, composed of directors, for

the purpose of conducting board business. As an initial matter, the Court notes

that the executive committee is not composed of directors, but officers of the

corporation. Given that the Bylaws define the duties of officers as clearly

managerial in nature, and there are no requirements in the Bylaws that officers

meetings. Since the Bylaws contemplate that these meetings will be held

monthly, the board could not have envisioned that much in the way of

significant action would be necessary. WLR Exh 2, Art. I, sect. 1, 4

*691 Second, while Louisiana law does not limit the scope of authority that a

board may delegate to agents, noted commentators have observed that to

abdicate total control of this corporation to its officers for an indeterminate

amount of time. To come to such a conclusion would require this Court to import

a level of deference to the officer class by the boards of the Hospitality

Companies that simply does not exist.

until the recent past, met frequently, even monthly, and historically exercised

significant supervision over the officers of the Hospitality Companies. Nothing in

the record of the case, or the conduct of the Hospitality Companies, indicates

that these boards did not take their role in corporate governance seriously.

Nothing substantiates the view that they would so completely abdicate their

bankruptcy proceeding. Absent a specific grant of authority, the board of

directors remains the authority to propose a plan of reorganization to creditors

and court alike for approval.

; (corporate president generally cannot bind the corporation in a

incompetence, or gross mismanagement of the affairs of the debtor by current

management either before or after the commencement of the case….” and (2)

under , “if such appointment is in the interests of creditors, any equity security

holders, and other interests of the estate.”

The appointment of a trustee is an extraordinary remedy as there is a

the creditors at heart. Allegations of hidden assets, claims against insiders for

For these reasons, the Court will appoint a trustee.