Nonprofit Basics: How To Wind up a California Charity
Episode 013: Interview with Justice Carolyn E. Demarest (Ret.) on Business Divorce Litigation
What is a petition for dissolution of marriage and what does it mean to serve the petition?
Just a few weeks ago, I commented on a recent uptick in disputes centered on the breakup of professional services firms. In those disputes, we expect that the demands of the legal, accounting, and medical professions draw...more
The California General Corporation Law provides that a California corporation that is dissolved continues to exist for the purpose of, among other things, defending actions against it. Cal. Corp. Code § 2010(a). This, of...more
A Members Voluntary Liquidation ("MVL") is a process undertaken by a solvent company to wind up its affairs in an orderly manner when the company has concluded its activities and the shareholders wish to distribute the...more
I previously wrote that one of the most difficult periods in the lifecycle of a closely held business is the period following the death of an owner, due to the tension between the remaining owners wishing to continue the...more
In re Matter of Global Safety Labs, Inc., C.A. No. 2022-0309-JTL (Del. Ch. May 12, 2022) - This case concerned the dissolution procedures of the DGCL, specifically Section 280, which with Section 281 establishes an...more
Section 1800 of the California Corporations Code authorizes specified persons to file a complaint for involuntary dissolution of the corporation based on specified grounds. Section 2000 provides an "escape hatch" by which...more
The California Revised Uniform Limited Liability Company Act provides procedures for both voluntary and judicial dissolution. When a member or members of a California limited liability company files an action for its...more
Under the California General Corporation Law a corporation which is dissolved nevertheless continues to exist for the purpose, among others, of prosecuting actions. Cal. Corp. Code § 2010(a). Further, no action to which a...more
My last several posts have for the most part concerned the liability of shareholders when a corporation voluntarily or involuntarily dissolves. Directors may also face liability under Section 316(a)(2) of the Corporations...more
Today's post follows up on two prior posts addressing actions by creditors of dissolved corporations. This post discusses the non-applicability of Chapter 5 of the California General Corporation Law to proceedings for...more
Yesterday's post observed that Chapter 5 of the California General Corporation Law does not apply to proceedings for winding up and dissolution of a California corporation under either Chapter 18 (involuntary dissolutions)...more
Chapter 5 of the California General Corporation Law imposes specific limitations on distributions to shareholders, as defined in Section 166. When a corporation is wound up and dissolved, whether the dissolution is...more
Several provisions of the California General Corporation Law provide for "special proceedings" in the Superior Court. One such provision is Section 1800 which allows certain persons to bring an action for the involuntary...more
New York Business Corporation Law § 1104-a empowers a holder of 20% or more of a closely held corporation’s stock to petition for that corporation’s dissolution on the grounds that, inter alia, the controlling shareholders...more
There’s tremendous diversity from state-to-state when it comes to statutory and judge-made law in business divorce cases. The basic fact patterns one sees in cases from across the country, however, don’t vary nearly as much....more
Section 1104-a of the Business Corporation Law (the BCL) empowers courts to dissolve a corporation if the petitioning shareholder can establish either of two specified grounds for dissolution. Section 1104-a(a)(1) authorizes...more
Sale of Stock- Ask a business owner to identify the parties to an agreement for the purchase and sale of the stock of a target corporation, perhaps even their own. After giving you a quizzical look, they will likely reply...more
Not for the first time, I find myself intrigued by the federal courts’ resistance to hearing state law claims for judicial dissolution of business entities where subject matter jurisdiction otherwise exists based on diversity...more
The Supreme Court has affirmed the Court of Chancery decision that Section 226 of the DGCL permits the Court to appoint a custodian to sell a Delaware corporation when the board of directors and stockholders are deadlocked...more
Contract and fiduciary duty law intersect when how a board acts, including the vote required, is affected by a shareholder agreement. Such agreements are common to enable investors to protect their investment, either through...more
The case of Salus Mundi Foundation et al v. Commissioner - On August 15, 2016, the Tax Court decided in Salus Mundi Foundation et al v. Commissioner, T.C. Memo. 2016-154, that two foundations were liable as transferees...more
Brief Summary - In 2013, three shareholders sued: (1) each other for breach of fiduciary duties; and (2) their company for involuntary dissolution. The law firm that represented one of the shareholders had been retained...more