Pat Simpson created the PS corporation, called PS, Inc., naming himself as CEO and the singular director. His intent was to build mobile college classrooms, classrooms that were double-wide mobile homes and fully equipped with desks, white boards, and enough electrical outlets for instructional tools, including computers. Each classroom cost $100,000 to build, and PS planned to build 10 classrooms within its first four months of operations. Pat put $10,000 of his money into the corporation. Pat was able to sell 1,000 shares in the corporation at $10 each. The production of the mobile classrooms was slow. Pat purchased a new Mercedes with the corporate funds, paid his monthly mortgage costs, and remodeled his game room. PS was left with $12,500 in cash and no classrooms, but debts of $65,000 owed to contractors who were working on the first classroom. Discuss the rights of creditors and shareholders in this situation.
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