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G.P. Publications Inc. v. Quebecor Printing3/4/1997
iness. Bateman met with Signal employees regarding the possibility of continuing to publish Signal magazines for a new owner. Valentino evaluated the financial and advertising aspects of a continuation.
Signal's Board of Directors considered filing a Chapter 7 bankruptcy petition which would have resulted in the liquidation of the company's assets. Robert Lock, President and Chairman of Signal, discussed this possibility with TFSI II's Gerry Hansen during a telephone conversation. In a follow-up letter to Hansen dated 13 February 1992, Lock noted his expectation that the board would instruct him to "file a Chapter 7 tomorrow afternoon unless we can do something to keep the assets protected." Thereafter, Hansen threatened "severe implications" and "other avenues of recourse" if Signal filed for bankruptcy. At a 17 February 1992 meeting, TFSI II's attorney informed counsel for Signal that TFSI II was considering suing Lock and Valentino. Quebecor contends that, as a result of this threat, Signal's Board then voted to consent to the "friendly foreclosure " desired by TFSI II.
Thereafter, TFSI II sent foreclosure sale notices to other publishing companies. However, the notices were addressed to no person or department in particular and were sent out only seven days before the scheduled sale. The notices generated almost no interest. The only company to express interest was Compute magazine. TFSI II responded to Compute's inquiry with an offer to sell Signal's assets for a $2.5 million "fire sale" price. However TFSI II provided Compute with no details regarding the assets to be sold and refused to allow Compute to perform its own due diligence.
Quebecor alleges that TFSI II made a conscious decision not to inform it of the foreclosure sale out of fear that Quebecor would have stopped the sale by initiating an involuntary bankruptcy . Upon purchasing Signal's assets, TFSI II transferred them to G.P. for a $1.8 million promissory note.
Quebecor offered evidence showing that all the former Signal employees hired by G.P performed the same functions at the new company that they had previously performed at Signal. [O><
Finally, Quebecor alleged that TFSI II paid inadequate consideration for Signal's assets. Quebecor's valuation expert testified that the collateral was worth from $3.5 to $5 million at the time of the foreclosure sale. Quebecor also introduced an investment proposal, created 3 days after the foreclosure sale, in which TFSI II valued G.P. at $2.5 to $3 million.
At the close of all the evidence, the trial court allowed: (1) TFSI II's motion for directed verdict on Quebecor's claim that TFSI II was a "mere continuation" of Signal; (2) TFSI II and G.P.'s motion for directed verdict on Quebecor's claims for tortious interference with contractual rights; and (3) G.P.'s motion for directed verdict on Quebecor's fraudulent trade practice claim. The trial court submitted the remaining issues to the jury which found, inter alia, that: (1) TFSI II's sale of Signal's assets was commercially reasonable; (2) TFSI II had not purchased the assets for "grossly inadequate consideration"; (3) G.P. was a "mere continuation" of Signal, but Quebecor had not sustained any damage; and (4) TFSI II wrongfully threatened Signal's board of directors and officers with a civil lawsuit and RICO action if they did not agree to a friendly foreclo
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