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Can a corp. file a petition if the majority shareholder,
This raises another interesting point. I have always commenced CH.
11 corporate cases by having a Board of Directors Meeting and
getting the Board to vote to approve the filing. I've never had
them get a shareholder vote (although, in most of my cases the board
of directors WERE the shareholders). Perhaps a Ch. 11 is not
considered a fundamental change in corporate structure. But if not,
what happens if the case gets converted to Ch. 7 by the court? Is
that taken care of by giving notice of the Motion to the shareholders?
On 11/25/2017 12:37 PM, jhayes@hayesbklaw.com [cdcbaa] wrote:
>
>
> Hi Nick,
>
> I'm interested in this issue because it will make a great final
> exam next year for my Business Org class next year. My students
> can recite in their sleep, "the board of directors makes all
> consequential decision," and, the shareholders do little except
> appoint the board and vote on other "fundamental changes to the
> corporate structure." Liquidating all of the assets of the corp
> seems to me to be a "fundamental change in the corporate
> structure." Cal Corps Code section 1001 says:
>
> (a) A corporation may sell, lease, convey, exchange, transfer,
> or otherwise dispose of all or substantially all of its assets
> when the principal terms are approved by the board, and,
> unless the transaction is in the usual and regular course of
> its business, approved by the outstanding shares ( Section 152
> ), either before or after approval by the board and before or
> after the transaction.
>
>
> The chapter 7 is certainly an "otherwise dispose of" the assets
> of the corp outside of the ordinary course of business. I would
> immediately file a motion to dismiss the case as it was not
> authorized by the shareholders. If that does not work, I will be
> happy to do the appeal. Of course, the trustee might find a
> creditor to file an involuntary but that is a different problem.
>
> I posted this on my school blog - www.profhayesuwla.com
>
>
>
>
>
>
>
> Virus-free. www.avg.com
>
>
>
>
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Perhaps she can fire the directors and elect a new one.
On Nov 25, 2017 8:47 AM, "'Larry' Webblaw@Gmail.com [cdcbaa]" wrote:
Nick,
The widow has 80% of the vote for directors. The two minority members
cant just keep her off the board. If the board was not properly formed by
vote of all shareholders it may not have authority to file bankruptcy.
Doesnt the authorization require a proper number of directors to vote for
bankruptcy. Would a motion to dismiss for lack of authority to file make
sense?
Best regards
Larry Webb
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California Board of Legal Specialization
Certified Specialist in Bankruptcy Law
P 805.987.1400
F 805.987.2866
C 805.750.2150
*From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com]
*Sent:* Friday, November 24, 2017 10:13 AM
*To:* cdcbaa@yahoogroups.com
*Cc:* Nicholas Gebelt
*Subject:* RE: [cdcbaa] Can a corp. file a petition if the majority
shareholder, who is not an officer or director, does not approve the filing?
*Importance:* High
Dear Larry and Christine,
The 80% shareholder is the widow of an 80% shareholder who was a board
member. When her husband died she got the shares as community property,
but was never put on the board. The board has two members, each 10%
owners. They voted to file the Chapter 7 based on the bad advice of
counsel. Now the 80% owner is facing a large preference avoidance action.
Id like to get the case dismissed, but it looks unlikely. It appears that
if the board voted to file, the filing was legitimate.
The attorney who filed the case had several previous suspensions. Based on
this filing at the very least he should have waited until the one-year
preference period had passed before filing I suspect hes looking at
another suspension.
Anyway, thanks for your input.
All the best,
Nick
*Nicholas Gebelt*
Nicholas Gebelt, Ph.D., J.D.
Attorney at Law
Certified Bankruptcy Law Specialist State Bar of California Board of
Legal Specialization
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Law Offices of Nicholas Gebelt
15150 Hornell Street
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