Problem
In 2015, Max Capital Assets, Inc., a major hedge fund operated out New York City, purchased 70% of the stock of Lindenwood Lubricant, Inc., a company manufacturing and distributing chemical lubricants and sealants used in the manufacture of industrial equipment. Upon acquiring a 70% ownership position in Lindenwood Lubricant, Inc., Max Capital replaced five of the nine Board members of Lindenwood with persons nominated by Max Axelrod, who owned 100% of the shares of Max Capital Assets, Inc. Among the five Board members nominated by Max Axelrod were two individuals who also sat on the Board of Directors of Max Capital, the CFO of Max Capital, as well as Axelrod's brother. At the time of the stock purchase, Max Capital infused $18,000,000 of capital into its new subsidiary. In 2016, Bill Stearns left his position as Vice- President of Corporate Compliance for Max Capital and was appointed Chief Financial Officer of Lindenwood Lubricants. In January 2019, Lindenwood Lubricants sold all of its assets and discontinued its business operations. After the net sale proceeds were distributed to Lindenwood's shareholders in proportion to their percentage ownership interest, Lindenwood Lubricants filed the appropriate papers to terminate its corporate existence. In November 2019, the the minority shareholders of Lindenwood Lubricants filed a lawsuit was filed against Max Capital Assets and Max Axelrod claiming that Lindenwood's board, which controlled by Max Capital and Max Axelrod, vastly undervalued Lindenwood's assets when the business was sold. The lawsuit alleges that the Lindenwood Board of Directors and and Bill Stearns were aware of the gross under-valuation costing Lindenwood's minority shareholders $247 million. You are Max Capital's retained legal counsel. You are asked to advise Max Axelrod and the Max Capital Board of Directors of the strengths and weaknesses of the claims Lindenwood's minority shareholders have brought against them. Explain in detail your advice to both Max Capital and Max Axelrod.