Corporate Dissolution Actions

Corporate Dissolution Actions

Where directors or shareholders of a Corporation have reached an impasse and are deadlocked as to the direction and management of the company, or in cases where there is a claim that those in control have committed fraud, mismanagement or abuse of authority or unfairness to minority shareholders, then California law provides such aggrieved shareholders to file an action to pursue involuntary dissolution of the entity and for an accounting of its assets. 

Such action may result in certain of the shareholders offering to purchase the shares of the shareholders that initiated the dissolution action, or the possibility of the sale of the entity as a going concern to a third party.

Dissolution actions require responsible directors and shareholder to navigate and follow precise corporate rules in conducting the dissolution to avoid any claims of mismanagement and incurring potential personal liability, including giving notice to creditors and employees, to pay bona fide creditors pay taxes, and generally wind up its affairs.