In the dynamic and often unpredictable economic landscape of California, businesses and individuals can sometimes find themselves facing overwhelming debt. While the term "bankruptcy" often conjures images of complete financial collapse, the reality is that the US Bankruptcy Code offers powerful tools for reorganization and debt management, providing a pathway toward a fresh start or a sustainable future. At KAASS LAW, we understand the complexities and anxieties in relation to financial distress, and we would like to dedicate in guiding individuals and businesses through the processes of bankruptcy reorganizations and arrangements in California.
Chapter 11 of the US Bankruptcy Code is usually falls under as a "reorganization" bankruptcy. Bankruptcy reorganization occurs when a corporation is unable to pay its outstanding debts or a company's passives exceed actives. As such, bankruptcy proceedings are likely to be initiate. These proceedings are all under the federal bankruptcy court. In the framework of bankruptcy reorganization, the insolvent corporation has a possible chance to draft and submit a reorganization plan to the court. The latter is aiming towards the financial recovery of a corporation. If the given reorganization plan is approved by the court, the corporation can continue its business activity since the payment of debts impeding corporate operations is adjourned.
The reorganization plan must include all the necessary measures deemed necessary to decrease costs and increase the income of the corporation. The measures may refer to:
If a reorganization plan is rejected by the court, the corporation is doomed to liquidation. That said, its assets will be sold to satisfy the claims of the creditors.
Pursuant to Corporation Code of California section 1400 of the trustee or trustees of a corporation appointed in the reorganization proceeding are vested the authority to exercise a reorganization plan or court orders without further consent by the corporation board or shareholders.
The powers of trustees, among other things, may include:
If the reorganization does not succeed, or the trustees have elected to dissolve, the corporation should elect to "wind up" the corporation. As such, the trustees would file a certificate of dissolution with the Secretary of State.
To start, the trustees sign and verify the certificate of dissolution when the corporation is completely up and ready. It shall state the following:
Navigating the complexities of bankruptcy reorganization and arrangements requires experienced legal counsel. At KAASS LAW, we offer:
If you are struggling with a financial hurdle that you cannot jump across, don't deal with this problem alone. As a result, with our services, we can overcome and achieve in helping you with your overwhelming debt. Finally, contact KAASS LAW today for a confidential consultation. We are here to provide the expert legal guidance and support you need to explore your options and take the first step towards a brighter financial future. Additionally, our firm offers expert business guidance through a scheduled consultation service. For instance, we can offer and navigate any opportunity to buy out your business partner.
A corporation registered with the State of California can cease its corporate existence in two ways:
Each way of dissolution has its grounds and specific legal procedure. While a corporation may be involuntarily dissolved under a court decree, the voluntary dissolution is carried out by a corporation’s shareholders, as well as in special cases by the Board of Directors. This article will address voluntary dissolution, leaving involuntary dissolution for a separate discussion.
The Corporations Code of California, chapter 19, sections 1900-1907, covers the legal regulations pertaining to the procedure of voluntary dissolution. These rules help an interested person to comply with the requirements of the law in the process of voluntary dissolution.
In general, someone may initiate voluntary dissolution by:
Regardless of whether you own an business with a family member, a friend, or hold a position on the board of a large corporation, you know that business and contract disputes can often times cause major problems. Specifically, business owners that face contract disputes with other companies and even more so, between their own ownership structure. For instance, a business contract dispute may arise between two or more partners, when one partner fails to fulfill his responsibilities. Often times business owners do not anticipate disputes until they arise. As a result, income might be lost due to contract breaches; ownership might be in the limbo due to outside lawsuits and claims; and tensions amongst business owners may rise. Lastly, a California business that is facing a lawsuit must be represented by an attorney. As such, a business owner cannot represent themselves in pro per.
As a matter of course, each general partner has an equal right to take part in the . Disputes in the ordinary course of business are decided by a of the . While, disputes or disagreements of or any to the . Be that as it may, in an partnership of any size the will provide for certain electees to manage the partnership along the lines of a company board. Generally, unless otherwise provided in the , no one can become a partner of the However, an existing partner may transfer partnership interests and assign his share of the profits and losses and right to receive distributions.
Shareholders may dissolve their corporation for a variety of reasons. In this regard, they are not accountable to anyone else. Shareholders holding shares representing 50% or more of the voting power should vote to wind up and dissolve the corporation, unless the articles of incorporation prescribe a higher threshold. Whereas, the board of directors may approve to wind up and dissolve a corporation which comes within one of the following descriptions:
Once the resolution on a voluntary dissolution is in place, the corporation steps into the stage known as “winding up”. This aims to finalize the debt-clearance process. It assumes paying outstanding debts and discharging pending liabilities. Afterwards, the corporation resolves the issue of distributing the remaining assets to the shareholders entitled thereto.
The corporation must notify its creditors about the commencement of dissolution, allowing them to submit their claims. Such notification shall include all the relevant information necessary for sending claims, for instance the mailing address, the deadlines for submission etc.
Further, you need to file a certificate of dissolution with the Secretary of State (SOS). The certificate of dissolution shall include the following information:
The official website of SOS provides the form of the certificate. You must submit the certificate via email or in person. Thereupon the corporate powers, rights, and privileges of the corporation ceases. The Secretary of State notifies the Franchise Tax Board of the dissolution.
However, in addition to the above actions, the corporation must consider a number of additional legal obligations. For example, the corporation must file a final tax return with the California Franchise Tax Board. Also, all applicable taxes must be paid before or at the time the Certificate of Dissolution is filed. In addition, if the corporation had employees, all requirements under the California Labor Code must be met. These include:
Failure to meet these obligations can result in civil liability and penalties. In addition, if the company holds any licenses or permits, they must be formally revoked or transferred. This is especially important for businesses in regulated industries. Such as:
Corporations are advised to retain accounting and corporate records for at least three years after liquidation. This may be necessary in the event of an IRS audit or creditor lawsuit. Contact KAASS LAW for legal assistance in all stages of liquidation.
If you need to initiate and finalize the process of a voluntary dissolution of your corporation, we invite you to contact an attorney at KAASS LAW at (310) 943-1171 and speak to our Glendale business attorney to assist with the process.
Businesses can dissolve the entire or part of a company by engaging in the "winding up" or "dissolution" process. The winding up process is subject to a strict legal rights of its partners, as well as creditors and claimants. Terminating a California business, often times involves a "liquidation process", where the company begins to wind-up affairs, pay debts, and dissolve. Furthermore, there are special procedures for dissolving corporations that are undergoing Chapter 7 bankruptcy, or have disposed of all assets, and not conducted any business for the last five years.
During the winding-up process is subject to strict legal rights of the shareholders, thus must be both "just and equitable" Thus, to ensure that all issues are considered and addressed appropriately, its is recommend to that you consult with California corporate attorney prior to submitting termination documents to the California Secretary of State. If you wish to dissolve or terminate your corporation, we invite you to contact our Glendale business corporate lawyers and discuss the proper legal steps you must take in order to property terminate your California corporation. Under California’s General Corporation law (“GCL”) shareholders holding shares with at least 50 percent of the voting power can voluntary elect to dissolve the corporation. It is important that you review your articles of incorporation and bylaws, and speak to a experienced Glendale business lawyer, to ensure that you are following the proper dissolution procedures specifically for your corporation. If a all members have approved that dissolution, your corporation continues to exist only for the purpose of taking care of final matters. As such, all board members have full power to wind up and settle the affairs of the corporation, including paying all known corporation debts and liabilities, and then distributing remaining assets, if any, to persons entitled to those assets.