FACT PATTERN 5: FUNDAMENTAL CORPORATE CHANGE- DISSOLUTION Flashcards Preview

Corporations > FACT PATTERN 5: FUNDAMENTAL CORPORATE CHANGE- DISSOLUTION > Flashcards

Flashcards in FACT PATTERN 5: FUNDAMENTAL CORPORATE CHANGE- DISSOLUTION Deck (11)
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1
Q

What are the 2 types of dissolution?

A
  1. Voluntary

2. Involuntary (by court order)

2
Q

What is required for a voluntary dissolution?

A

Board of directors action and approval by a majority of the shares entitled to vote. File notice of intent to dissolve with the Secretary of State. Corporation stays in existence to wind up. Notify creditors so they can make claims.

3
Q

Who can petition for an involuntary dissolution?

A

Shareholders and creditors

4
Q

What reasons can a SH petition for a voluntary resolution?

A
  1. Director abuse, waste of assets, misconduct;
  2. Director deadlock that harms the corporation; or
  3. Shareholders have failed at two consecutive annual meetings to fill a vacant board position.
5
Q

As an alternative to ordering involuntary dissolution, court might do what?

A

order buyoutof the objecting shareholder

6
Q

As an alternative to ordering involuntary dissolution, court might order buyout of the objecting shareholder. When might this be especially likely?

A

In a close corporation

7
Q

Under what circumstances can a creditor petition for involuntary dissolution?

A

corporation is insolvent and

(1) he has an unsatisfied judgment or
(2) the corporation admits the debt in writing.

8
Q

Is dissolution the end of a corporation?

A

No, it is the beginning of the process of winding up the corporation.

9
Q

What does winding up consist of?

A
  1. gathering all assets,
  2. converting to cash,
  3. pay1ing creditors, and
  4. distributing remainder to shareholders, pro-rata by share unless there is a liquidation preference.
10
Q

What’s a liquidation preference?

A

It means “pay first,” (works like dividends)

11
Q

if there is a liquidation preference, where must it be listed?

A

it must be in the articles.

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