Timely Dissolution Can Protect Shareholders
When a California corporation dissolves, it continues to exist for the purpose of defending claims against it (and prosecuting claims in its name), though a claim by a creditor against a shareholder to...
View ArticleAlter Ego Claims of Creditors Do Not Belong to Bankruptcy Trustee
In Ahcom, Ltd. v. Smeding, 623 F.3d 1248 (9th Cir. 2010), the U.S. Court of Appeals for the Ninth Circuit decided the question whether a creditor of a corporation that is in bankruptcy has standing to...
View ArticleDealing With a Financially Weak Corporation
Knowingly dealing with a thinly capitalized corporation and not asking for a guaranty will make it tough to pierce the corporate veil. This is illustrated by the case of Fusion Capital Fund II, LLC, v....
View ArticleDemise of the Notion That Alter Ego Claims Belong to the Bankruptcy Estate
Shaoxing County Huayue Import & Export v. Bhaumik In Shaoxing County Huayue Import & Export v. Bhaumik (2011) 191Cal.App. 4th 1189, a creditor of a bankrupt corporation sued in state court to...
View ArticleCourt Permits Assets of Business Entity to Be Used to Satisfy Creditors of...
In Toho-Towa Co., Ltd., v. Morgan Creek Productions (2013) 217 Cal. App. 4th 1096, the court held that the assets of one business entity could be used to satisfy the obligations of a different, but...
View ArticleFiling Requirements and Suspension of Corporate or LLC Powers
California limited liability companies (LLCs) and California corporations are creatures of statute, and their failure to comply with statutory requirements can lead to their rights, powers, and...
View ArticleOfficer Liable for Restitution of Corporation’s Gains in Violation of FTC Act
In Federal Trade Commission v. Commerce Planet, Inc. (9th Cir. March 3, 2016) 16 C.D.O.S. 2355, the Federal Trade Commission (FTC) sued Commerce Planet, Inc., and three of its top officers for...
View ArticleAdministrative Dissolutions
As previously posted on this blog, California law was changed (AB 2503) to allow the state to dissolve entities administratively instead of allowing zombie entities to remain on the rolls permanently....
View ArticleI Asked ChatGPT a Legal Question–Here’s What It Said
I posed the following question to ChatGPT: What is the difference between a corporation and an LLC? Here is the response generated by ChatGPT (with my comments in red): A corporation and a limited...
View ArticleStock without Certificates
Now that we are moving more and more into electronic records, can we dispense with stock certificates? Yes, we can, but for most closely held corporations, it may not be worthwhile to change to...
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