Can a corp. file a petition if the majority shareholder,
Posted: Sat Nov 25, 2017 4:20 pm
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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The post was migrated from Yahoo.
